Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH TRANSPORT COMMISSION BILL (By Order)

Second Reading deferred till Wednesday next.

GLOUCESTER CORPORATION BILL (By Order)

Second Reading deferred till Wednesday, 13th March.

PEOPLE'S DISPENSARY FOR SICK ANIMALS BILL (By Order)

Second Reading deferred till Wednesday, 13th March.

BARRY CORPORATION BILL (By Order)

Read a Second time and committed.

PETITIONS

Road Communications

Mr. Gower: I beg to ask leave to present two petitions signed by residents in Wales and the West of England about the need for improving road communications in the areas concerned and pointing out that at present they are detrimental to prosperity. The first petition is signed by 35,000 persons in South Wales, and is as follows:
Wherefore your petitioners pray that to ensure the early completion of adequate modern roads in and serving South Wales arrangements shall be made forthwith to raise a special road loan to provide the necessary funds during the period required to carry out the essential work under a comprehensive and scientifically planned scheme so avoiding the delays and frustrations which have proved to be inevitable under the present system of financing road works by means of annual grants.
The petition concludes,
And your petitioners, as in duty bound, will ever pray.
The second petition, which is signed by more than 11,000 persons resident in

South Wales, Bristol, the West of England and the West Midlands, is in similar terms. It refers in particular to road communications in and serving South Wales, Bristol and the Midlands areas, and it also concludes,
And your petitioners, as in duty bound, will ever pray.

To lie upon the Table.

Oral Answers to Questions — MINISTRY OF DEFENCE

Overseas Death (Repatriation Costs)

Mr. Chapman: asked the Minister of Defence whether he is aware that the Services charged a figure of £270, or more, as the cost to parents of bringing home the body of a Service man killed in Gibraltar, including £70 for a special coffin and £60 to £140 for sea or air transport; whether he is aware that these costs are excessive; and whether he will have special inquiries made with a view to drawing up a standard scheme under which simpler provisions and use of Services transport, when available, could bring these costs down to a reasonable level.

The Minister of Defence (Mr. Duncan Sandys): The figures quoted were commercial and not Service charges. I should be glad to consider any suggestions for simplifying the procedure.

Mr. Chapman: I am very much obliged to the right hon. Gentleman. Is he aware of the fraud which has been practised on the parents in this case? Is he aware that I have here the report of a reputable firm of undertakers on the £75 coffin, that it was doubtfully of oak, that it was probably made here, and that, with transport to Gibraltar, it is worth less than £30? Is he also aware that the zinc lining for which they were charged £35 is worth less than £10? Will he agree that the parents should not pay a single penny until he has had the opportunity personally to investigate the scandal in this case?

Mr. Sandys: Of course I have not the information which the hon. Member has mentioned, but these are commercial charges and the matter is one between the relatives and the undertakers and others concerned.

Mr. Chapman: No, that is not the case. Is the Minister not aware that the War Office does all the arranging on behalf of the parents because they have no means of making the necessary contact?

Mr. Sandys: All I can do is to say that I will ask my right hon. Friend the Secretary of State for War to find out what steps were taken to ensure that as far as possible the parents or relations were put in touch with a reputable firm.

Mutual Defence Assistance Agreement (Equipment)

Mr. Swingler: asked the Minister of Defence if, in the light of Her Majesty's Government's claim to take independent military action in certain fields, he will instruct the Service Departments to keep equipment received under the Mutual Defence Assistance Agreement separate from British equipment.

Mr. Sandys: That would not be practicable.

Mr. Swingler: Is it not a fact that we accepted this American equipment on the understanding that it was to be used only in pursuance of policies approved by the United States? Is it not a fact also that this agreement was violated in the case of the intervention in Suez; and, in the light of Her Majesty's Government's claim to independent action, how does the Minister propose to prevent further violation?

Mr. Sandys: I feel that the United States Government are well able to look after their own interests without any help from the hon. Member.

Mr. Wigg: Is the right hon. Gentleman aware that his predecessor said that all the equipment was muddled up? Is it not about time that it was un-muddled so that the Minister of Defence may know what equipment he has got?

Mr. Sandys: It is not a question of being muddled up, but it is very difficult to keep it separate.

Mr. Swingler: Is it not a fact that the American Government made a protest about the use of this equipment, to which Her Majesty's Government were unable to make any reply?

Mr. Sandys: That does not happen to be the fact.

Military Stores and Equipment (Economies)

Mr. Swingler: asked the Minister of Defence what instructions he has given to the Service Departments concerning economy in the expenditure of moneys voted by Parliament for military stores and equipment.

Mr. Sandys: The Service Departments are fully aware of the importance of economy. I am, however, considering what special action should be taken to deal with the points raised in the Third Report of the Select Committee on Estimates.

Mr. Swingler: If the Minister has read the Third Report of the Select Committee on Estimates, is he not aware that a representative of one of the Service Departments said there that it was the policy to spend up to the hilt? Will not the Minister issue a directive to say that it is not his policy that the Service Departments should spend up to the hilt of the Estimates but that they should try to underspend the money voted by Parliament?

Mr. Sandys: That is one of the points that I have in mind, but, as the House knows, the system of annual accounting for matters which really extend over longer periods has always raised difficulties of this kind, and always will.

National Service and Voluntary Recruitment

Mr. Swingler: asked the Minister of Defence what are his current estimates of the additional number of long-service volunteers required for each of the Services to enable him to abolish conscription.

Mr. Lipton: asked the Minister of Defence when he intends to substitute a selective ballot for the present system of call up for National Service.

Mr. Sandys: I propose to deal generally with the question of National Service and voluntary recruitment in the forthcoming White Paper on Defence.

Mr. Lipton: Is the right hon. Gentleman aware that, while a selective ballot may be an easy way out for the Government before conscription is abolished, there will be strong objection to taking two years out of a man's life as a result


of a lucky or unlucky dip? Does the right hon. Gentleman's answer mean that the selective ballot is still under consideration?

Mr. Sandys: Before making a lucky dip, the hon. Member would do well to await the publication of the White Paper.

Mr. G. Brown: But is the Minister now prepared to tell us—the Lord Privy Seal was not prepared to do last week—when this White Paper, now long overdue, will in fact be available?

Mr. Sandys: As soon as possible, and in the course of next month.

Mr. Swingler: Can the right hon. Gentleman say whether the White Paper will contain the estimates asked for in my Question, No. 4, which asked for the
estimates of the additional number of long-service volunteers required…
Will the White Paper contain those estimates?

Mr. Sandys: It will contain as much information as I can usefully provide to the House.

Officers (Training)

Major Wall: asked the Minister of Defence whether he will give consideration to the setting up of a joint training college for the basic training of young officers of all three Services.

Mr. Sandys: Any scheme for closer understanding between the Services has obvious attractions, but it raises quite a number of practical difficulties.

Major Wall: Will my right hon. Friend undertake to consider this matter seriously, in view of the fact that the basic elementary training of young officers and officer cadets is much the same in the three Services, and in view of the undoubted success on a higher level of such inter-Service training as the Imperial Defence College and the Joint Services Staff College?

Mr. Sandys: I can assure my hon. and gallant Friend that I do see the advantages, but I also see the difficulties.

British Forces, Germany

Mr. E. Fletcher: asked the Minister of Defence if he will now announce what proposals he is making to the North

Atlantic Treaty Organisation for a reduction of the British forces in Germany.

Mr. Sandys: I cannot at present add to my Answer to the right hon. Member for Belper (Mr. G. Brown) on 20th February.

Mr. Fletcher: Could the Minister clarify the issue? Bearing in mind that we are making a disproportionate contribution to N.A.T.O. defence in comparison with our allies, will the right hon. Gentleman confirm that it is our policy to seek a reduction of our burden, not only our manpower burden, but also our economic burden, in view of the fact that, unlike our allies, we have to incur the cost of stationing troops abroad?

Mr. Sandys: I think it is public knowledge that we are at present in the course of consulting our allies on this question.

Mr. G. Brown: Does the Minister realise that so far as one can discover, this House is the only place which does not know officially what he is proposing? The other nations all know; the Press is pretty well informed. Would it not be a good thing if he told the House what is being put forward ultimately in our name?

Mr. Sandys: I really think that it is not customary, nor is it really a good plan, to precede diplomatic negotiations with other Governments by publication of one's views in the House of Commons.

Mr. Shinwell: While not seeking in any way to weaken N.A.T.O. defence in the present circumstances, will not the right hon. Gentleman agree that it would be unwise to allow the United Kingdom Government, in these negotiations, to be intimidated by other Governments which have not made so valuable a contribution as has the United Kingdom?

Mr. Sandys: I do not think that anybody who attended the conference of Western European Union yesterday had any impression that Her Majesty's Government were being intimidated.

Guided Missiles and Rockets (Co-operation with France)

Mr. E. Fletcher: asked the Minister of Defence what agreement has been reached with the French Ministry of


Defence for pooling research and production on guided missiles and rockets.

Mr. Sandys: I have nothing to add at present to the statement I made on 20th February.

Mr. Fletcher: Would the Minister confirm that strategically our position is almost identical with that of France, and therefore the closest possible integration between our defensive efforts and those of France is essential?

Mr. Sandys: Our defence problems have much in common and that is why, as I said in my earlier statement, we are examining with the French Government what further scope there is for closer co-operation.

Defence Requirements

Miss Burton: asked the Minister of Defence if he is yet in a position to make a statement concerning the proportion of defence requirements which will be met by industry in the United Kingdom.

Mr. Sandys: It will always be a high one.

Miss Burton: Will the Minister bear in mind, when considering that "high one," that in Coventry we have a greater armament production capacity than any other city, and that that capacity includes more than one Service, which is why I am bringing the problem to the right hon. Gentleman? Is the right hon. Gentleman aware that Armstrong-Whitworth Aircraft Ltd. are shortly to turn off 600 men because of the cut-back in defence orders? As we should like to keep those men in the city, could the right hon. Gentleman do something about this soon?

Mr. Sandys: I recognise the importance of Coventry, and I have no doubt that the hon. Lady's supplementary question will be noted by her constituents.

Miss Burton: While being quite sure and very glad that it will be noted by my constituents, may I ask the Minister whether, much more important, the supplementary question will be noted by him and by the people concerned with contracts?

Mr. Sandys: I always take note of the hon. Lady's remarks.

Officers' Widows (Pensions)

Mr. E. Johnson: asked the Minister of Defence if he has completed his examination of the possibility of introducing a contributory scheme for officers' widows' pensions; and if he will make a statement.

Mr. Sandys: This problem is at present being studied by the Service Departments on the basis of the Pay Code introduced last year.

Mr. Johnson: Does my right hon. Friend expect that the examination of this problem will soon be completed? Is he aware that his Department wrote on 17th December to the Officers' Pension Society saying that the matter was still being examined?

Mr. Sandys: It takes quite a number of months to examine a problem of this kind. The Pay Code was introduced only last year. I can assure my hon. Friend that this matter is being considered most seriously.

Mr. Wigg: Does the right hon Gentleman's previous reply denote that he is either a fathead or a bighead, or a combination of both?

Mr. E. Johnson: asked the Minister of Defence if he will introduce regulations to provide that widows of officers who married after retirement shall be eligible for widows' pensions.

Mr. Sandys: I am afraid not.

Mr. Johnson: May I ask my right hon. Friend if he is aware that I inadvertently worded my Question wrongly, and that such Regulations are already in existence? Is it not a fact that, provided that the officer was serving before 30th August, 1907, and had served for twenty years and he was married not later than three years afterwards, his widow was able to get such a pension? Could he not, perhaps, bring those Regulations a little more up to date?

Mr. Sandys: Perhaps my hon. Friend would put that question down.

Staff and Administration Costs

Mr. Lewis: asked the Minister of Defence what recent action he has taken to reduce the staff employed in his


Department, and to reduce the cost of administration; and to what extent these efforts have proved successful.

Mr. Sandys: I have not yet got round to that.

Mr. Lewis: Can the Minister be a little more forthcoming and tell us what he anticipates doing? Is he in fact going to make some economies? Is he going to take some action to cut down the Department, and if he does, will he consider reducing the forty-five major-generals, and putting them in the ranks, perhaps?

Mr. Sandys: In his Question the hon. Member referred to the Ministry of Defence. The Ministry of Defence is a small Department, and I am at the moment after rather bigger fish.

Mr. Lewis: asked the Minister of Defence the total number of staff employed in his Department in February, 1952, as compared with the latest convenient stated date; and what the total salary and wage bill was on these two stated dates.

Mr. Sandys: This perhaps will give the hon. Member the Answer he wanted. In February, 1952, the number of staff borne on the Ministry of Defence Vote was 1,247. Salaries and wages amounted to £900,000. The corresponding figures for February, 1957 are 1,175—a reduction—and £1,200,000.

Hon. Members: An increase.

Mr. Lewis: From that it would appear that there has been a reduction in staff, and yet an increase in the salary bill. Can we understand why? [HON. MEMBERS: "The cost of living".] I am asking whether we can have an explanation, as there really should not have been any salary increases because there has been no increase in the cost of living, according to what we have been told by the Government. Why, then, the salary increases?

Mr. Sandys: It is almost entirely due to increases in the pay of civil servants which were awarded during that period. [HON. MEMBERS: "Why?"] They were awarded because there had been a very

long time-lag in increases of pay to civil servants.

Disciplinary Action

Mr. Wigg: asked the Minister of Defence what powers he proposes to take to direct that disciplinary action should be taken against those serving in the Royal Navy, Army and Royal Air Force or against officials whose salaries are borne on Votes other than those for which he is responsible.

Mr. Sandys: I see no need for such powers.

Mr. Wigg: In reply to my right hon. Friend the Member for Easington (Mr. Shinwell), the Minister made it quite clear that he had considered whether disciplinary action was justified or not. Therefore, is it not very necessary that, before making replies of that kind, he should be aware of the limitations upon his own powers, unless he propeses to increase them?

Mr. Sandys: My feeling is that the Service Departments are well able to look after discipline themselves. That does not mean that I am not perfectly entitled, in reply to the right hon. Member for Easington, to make such comments as I think desirable.

Mr. G. Brown: But is not the right hon. Gentleman getting away from his original Answer? Originally, he answered the Question put by my right hon. Friend the Member for Easington on the basis that he had decided whether disciplinary action should be taken or not. Has he the power to decide, or is there a power which rests with his right hon. Friends the Secretaries of State? If it is the latter, should he not have phrased his original Answer quite differently?

Mr. Sandys: I do not know whether the right hon. Gentleman has my Answer in front of him.

Mr. Wigg: I have.

Mr. Sandys: I have not. Anyhow, we cannot deal with it in that way now at Question Time. I certainly do not think that I gave an Answer which implied that I had powers of disciplinary action.

Mr. Brown: The Minister did.

Mr. Sandys: I did make a comment on whether or not I thought disciplinary action was called for, which is quite a different matter.

Mr. Shinwell: indicated assent.

Mr. Brown: rose—

Mr. Sandys: The right hon. Gentleman the Member for Easington nods his head in agreement with me.

Mr. Brown: I will not be provoked into saying whether that intimidates me or encourages me; that is for the House to decide. Will the Minister look again at the original reply which he gave and see whether it accords with the powers which he has in fact got?

Mr. Sandys: I will see whether it accords with what I have just said.

Mr. Shinwell: As I put the original Question and I heard the original Answer, I really have no comment to make other than to say that I do not want to cause a row.

Joint Staff Planning

Mr. Bellenger: asked the Minister of Defence whether he envisages the inauguration of closer joint staff training between the Services.

Mr. Sandys: I should be glad of any suggestions from the right hon. Gentleman for further improving the present excellent arrangements.

Mr. Bellenger: I shall be glad to give the right hon. Gentleman any advice which I possibly can; but is it not his duty as a Minister of the Crown himself to take the initiative, particularly in view of the fact that in the future, probably the very near future, there will have to be a closer integration of the Services because of the weapons which they will use, and therefore the staffs themselves should start by having closer staff college training than at the moment?

Mr. Sandys: The right hon. Gentleman, as a former Secretary of State for War, knows full well the very extensive arrangements which already exist, the various colleges and specialist schools, etc., for this precise purpose. But, as I say, I shall be very happy to consider any further suggestions which he may have in mind.

Civil Defence

Mr. Emrys Hughes: asked the Minister of Defence what discussions he had in Washington on the subject of joint preparations for Civil Defence.

Mr. Sandys: None, Sir.

Mr. Hughes: Is the Minister aware that I did not ask him what plans he had for defending the civil population? Did it not occur to him at Washington to think of the civil population as an afterthought, just as an accident, and is he still responsible for a scheme to evacuate 12 million people from this country? In view of the fact that we are 2,000 miles nearer the rockets he spoke about than is New York, ought he not to have some plans for evacuating these 12 million people to a safer part of the United States?

Mr. Sandys: As I think the hon. Gentleman knows, there are already good arrangements for close consultation between members of the N.A.T.O. alliance, including, of course, the United States.

Air Defence (Atomic Weapons)

Mr. G. Brown: asked the Minister of Defence what steps are being taken to equip the air defence forces of Great Britain with atomic weapons.

Mr. Sandys: I have no statement to make at present on this subject.

Mr. Brown: In view of the announcement by the Americans that they are deploying aid for weapons for home defence, has the Minister really nothing to say about whether he discussed the question of bringing to our aid for home defence in these very vulnerable islands at least the most up-to-date weapons which are available?

Mr. Sandys: On atomic matters, one has to be very careful what one says and when one says it.

Mr. Brown: That seems to be a rather silly answer.

Forces (Strength)

Mr. G. Brown: asked the Minister of Defence to what extent the cuts in maximum number of the forces as shown in Estimates represent any change of the policy announced in Command Paper No. 9608 of 1955.

Mr. Sandys: Not at all.

Mr. Brown: As a comment on my previous comment, that might have been intelligent; but, as an Answer to Question No. 17, it seems to require a little understanding. If I understand that Answer to mean that these cuts mean no change at all in the policy announced in 1955, is it not time that the right hon. Gentleman stopped hinting to the Press that he has in fact been slashing the forces all over the place? Had he not better "come clean" pretty soon as to what he is in fact doing?

Mr. Sandys: There seems to be some misunderstanding about these figures. As was made clear in the Vote on Account, they are ceiling figures, that is to say, they are figures beyond which the size of the forces will not rise during the forthcoming financial year. They do not provide any indication of future policy; they are, in effect, more or less the present size of the forces today. The only indication of future policy which they give is that we do not contemplate an increase in the size of the Forces during the next financial year.

Mr. Brown: So that the headlines, for example, in the Daily Express, "Forces get Slash No. 1", are quite inaccurate and untrue?

Mr. Speaker: Order. I do not think that the Minister is responsible for headlines in the papers.

Mr. Shinwell: Will not the right hon. Gentleman tell the House that the ceiling figures in no way indicate that the Forces cannot be reduced. and that there is an opportunity for him to tell us, when he produces the White Paper, that he proposes to reduce them?

Mr. Sandys: That is the very nature of a ceiling.

National Service Men

Mr. Zilliacus: asked the Minister of Defence whether he will exempt National Service men from serving in military operations, undertaken in pursuance of the Bagdad Pact, or at the instigation of the United States of America under the Eisenhower doctrine or under South-East Asia Treaty Organisation to put down alleged Communist subversion in the territories of Middle Eastern or Far Eastern States.

Mr. Sandys: No, Sir.

Mr. Zilliacus: Does the Minister's reply mean that the Government believe that they are entitled to use, and could get away with using, British forces, let alone National Service men, to put down popular risings in countries like Iraq, Iran and Vietnam, with reactionary dictatorships in charge? Do they not realise that we would get stuck in a situation far worse than that facing us in Cyprus today. and that the Government might end by provoking popular resistance of the kind that put an end to intervention in Russia?

Mr. Sandys: The hon. Member's Question referred to Communist subversion. Happily, the hon. Member's attitude towards Communism is shared by very few people in this country.

Mr. Daines: Could the Minister use his powers of persuasion with the hon. Member for Gorton (Mr. Zilliacus), with his unique qualities and contacts, to make representations to the Russian Government so that they could adopt similar proposals and prevent a recurrence of the recent events in Hungary?

Mr. S. Silverman: Now that the right hon. Gentleman has had his fun, will he direct his mind to the substance of the Question which my hon. Friend asked: namely, whether British forces are to be used in order to intervene in revolts or rebellions of any kind in any country which anyone may choose to describe as Communist?

Mr. Sandys: The Question dealt with Communist subversion. [HON. MEMBERS: "Alleged."] "Alleged" does not alter it. Somebody has to form a view about it and it must be the Governments who are responsible for the time being in the countries concerned. I think it is generally accepted that straightforward military aggression is not the only form of threat with which the free world is faced.

Guided Missiles

Mr. de Freitas: asked the Minister of Defence what he is doing to prevent overlapping between the Royal Air Force and the other two Armed Services in the procurement, storage, and maintenance of guided missiles, their components, and ancillary equipment.

Mr. Sandys: This matter is being watched.

Mr. de Freitas: Is the Minister not aware that in spite of assurances given on this point by at least two of his six predecessors, there are alarming signs of increased overlapping and empire-building in the Services at this point?

Mr. Sandys: I should be very glad indeed to look into any points that the hon. Member has in mind.

Mr. Wigg: Do not the Minister's answers to Questions today make it perfectly clear that he is neither bighead nor fathead, but just simply blockhead?

Hon. Members: Withdraw.

Mr. Speaker: An hon. Member should not use the opportunity of a supple. mentary question merely to indulge in abuse. Mr. de Freitas.

Mr. de Freitas: Question No. 20.

Mr. Sandys: I take no exception to the remarks of the hon. Member for Dudley (Mr. Wigg). I regard them as typical of what I would have expected from him.

Mr. S. Silverman: On a point of order. While everyone would respectfully agree with the observation which you have just made, Mr. Speaker, about the wrong use of supplementary questions, is it not equally true that if a Minister makes a wrong use of the opportunity to answer Questions in order to be unreasonably and deliberately provocative, he may get the kind of response that he did not want?

Mr. Speaker: That is a purely hypothetical question. [Interruption.] I did not think the Minister abused his position. After all, he was the first one to be attacked.

Mr. G. Brown: Further to that point of order. May I submit, Mr. Speaker, that it has occurred to many of us, and, I suggest, it may have occurred to you, that the Minister has used every Answer today, on a subject that should be outside the ordinary frivolities of this House —[HON. MEMBERS "Oh."]—to make what he, no doubt, thought was a clever answer? You, Mr. Speaker, chose to rebuke my hon. Friend, and we do not dispute your right to say what should be done, but may I not submit that that

applies both ways and that the Minister has abused his position this afternoon?

Mr. Speaker: That is not a point of order for me. What I think happened was that the hon. Member for Dudley (Mr. Wigg)—I think I must honestly say with no evil intent—used a series of expressions which hon. Members should not use to each other, such as "bighead", "fathead", and so on. I think that that was wrong. Perhaps the Minister may have been technically out of order when giving his reply, but if Members on either side of the House are provoked I always give them a certain amount of latitude in how they react. We have to remember that we are human beings here.

Mr. Lipton: On another point of order, Mr. Speaker. May I ask whether the Minister of Defence would like to have another shot at answering Question No. 21?

Mr. Speaker: Mr. Dodds. Question No. 22.

Mr. de Freitas: You called on me to ask Question No. 20, Mr. Speaker. Since then, there has been a wide exchange of remarks from one side to the other and I have not had an answer to my Question.

Mr. Speaker: I am afraid that the House put me out of my count.

Mr. Wigg: On a point of order, Mr. Speaker. You were kind enough to say that I had no evil intent. May I be allowed to say that I had every evil intent? But if in having an evil intent I was out of order, naturally I should wish to withdraw.

Mr. Speaker: I do not know whether to believe that or not. Can we now have Question No. 20?

20. Mr. de Freitas: asked the Minister of Defence whether, as a result of his discussions in Washington, we shall receive air-to-air and ground-to-air guided missiles of the types used by the United States armed forces.

Mr. Sandys: I cannot add at present to my statement of 6th February.

Mr. de Freitas: Although the Minister has been most reluctant to give us any information on this important matter,


can he at least deal with this point? Are the weapons that are coming to us up-to-date or are they obsolescent and inferior to what could be obtained on this side of the Atlantic?

Mr. Sandys: I propose to make a statement as soon as I can, but if the hon. Member reads my earlier statement he will see that I cannot do so immediately. These are matters which, as I said in my earlier statement, are being considered by the two Governments. Until a conclusion has been reached, it would be quite impossible for me to enlarge upon what I said before, which was in accord with what was agreed between myself and the American Secretary for Defence. If I were to enlarge on it, he might do the same, and we might get into difficulties.

Mr. G. Brown: Are we to wait until the White Paper for the Minister's statement or does he propose to make a statement beforehand? On the last occasion when he answered Questions, after two or three exchanges the right hon. Gentleman somewhat reluctantly said that he would make a statement in advance of the White Paper. Another week has now gone by. When are we likely to have a statement?

Mr. Sandys: I think I said "I hope" before.

Oral Answers to Questions — SPAIN AND GIBRALTAR

Mr. Dodds: asked the Secretary of State for Foreign Affairs what progress has been made in the efforts to improve relations between Spain and Gibraltar in the best interests of the Spanish people and Gibraltarians.

Mr. G. Jeger: asked the Secretary of State for Foreign Affairs whether there has been any improvement in the restrictions imposed by the Spanish Government against Gibraltar; and whether he will make a statement.

The Secretary of State for Foreign Affairs (Mr. Selwyn Lloyd): I regret to say that the position regarding Spanish restrictions on intercourse between Gibraltar and Spain remains essentially as stated in my reply to the hon. Member of 6th June last. Her Majesty's Government have left the Spanish Government in no doubt that they consider these restrictions harmful to the interests of Spain and Gibraltar and also to the relations between Spain and the United Kingdom.

Mr. Dodds: Is the Foreign Secretary not aware that for a long time this hard-pressed community in Gibraltar have felt that Her Majesty's Government have not done everything that they might have done to help them in their problems? Does the right hon. and learned Gentleman not also appreciate that when the people of Gibraltar read of arrangements being made between this country and Spain on other matters, they wonder whether Gibraltar's interests are being forgotten?

Mr. Lloyd: Certainly, we are not forgetful of Gibraltar's interests, and we are constantly raising these matters. In one or two respects we have procured some slight alleviations. For example, one was procured on 13th February with regard to the rate at which currency could be exchanged, and we shall continue to press to try to get alleviation of what I have described before as really very petty restrictions.

Mr. Jeger: Does the Foreign Secretary not realise that the best way of bringing pressure to bear upon the Spanish Government to withdraw many of these petty restrictions would be in connection with the Anglo-Spanish trade talks, in which we could use our influence and our trade against Spain? Why does the right hon. and learned Gentleman not use his influence with the President of the Board of Trade to get something done in that direction?

Mr. Lloyd: I think that the House and Governments formed by both parties have had certain experience of trying to bring pressure to bear on the Spanish Government and people. I do not think that it is always the wisest way of getting an answer to talk in terms of using our influence against Spain. We have tried to promote better relations between Spain and this country. As I have said, something has been done in that direction. One of the things which stands in the way of a further improvement is the continuance of these petty restrictions.

Oral Answers to Questions — B.B.C.(FOREIGN OFFICE LIAISON OFFICER)

Mr. G. M. Thomson: asked the Secretary of State for Foreign Affairs on what date the liaison officer to the British Broadcasting Corporation was appointed to his post; and on what date he took up his duties.

The Joint Under-Secretary of State for Foreign Affairs (Mr. Ian Harvey): The liaison officer to the British Broadcasting Corporation was appointed to his post on 1st November and took up his duties on 12th November. A temporary liaison officer acted during the interim period.

Mr. Thomson: As that was at the height of the Suez crisis, and as the Government have had power for several years to make this appointment and did not do so, is not this conclusive proof of the Government's dislike of the B.B.C.'s objective reporting of the Suez crisis and that they are doing their best to bring pressure to bear on the B.B.C.?

Mr. Harvey: It is conclusive proof of nothing. The arrangement was made to improve the relationship between the B.B.C. and the Foreign Office for news reporting, and it is our intention that it should continue to be improved.

Mr. Thomson: In view of the very unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment.

Oral Answers to Questions — PERSIAN GULF STATES (PARLIAMENTARY DELEGATIONS)

Mr. Warbey: asked the Secretary of State for Foreign Affairs whether he will propose to the Rulers of Bahrain, Qatar, Kuwait, and the Trucial States reciprocal visits by Parliamentary delegations, or their equivalent, from the Persian Gulf States and the United Kingdom.

Mr. Ian Harvey: As the hon. Member will be aware, the systems of government of these States are not Parliamentary. It would, therefore, be inappropriate for my right hon. and learned Friend to propose reciprocal visits by Parliamentary delegations or their equivalent.

Mr. Warbey: Since conditions there are not only not Parliamentary but reveal a total absence of civil liberties and of modern legal rights is it not time that they were properly investigated by Members of Parliament so that we may know what goes on in our name?

Mr. Harvey: I do not think that that proposition is altogether a very sound one.

Oral Answers to Questions — UNITED NATIONS

Trusteeship Council (Non-Administering Members)

Mr. Russell: asked the Secretary of State for Foreign Affairs what steps are taken by the United Nations organisation to check the qualifications of the representatives of the non-administering members of the Trusteeship Council.

Mr. Ian Harvey: None, Sir. The choice of representatives is a matter for the member Governments which appoint them.

Mr. Russell: Does not Article 86 of the Charter of the United Nations lay down that representatives shall be qualified to speak on colonial administration. or know something about it? Is it not a mockery if they are not properly qualified?

Mr. Harvey: I do not think it is for us to say whether they are qualified or not.

Mr. Russell: asked the Secretary of State for Foreign Affairs who are the present representatives of the non-administering members of the United Nations Trusteeship Council.

Mr. Ian Harvey: The representatives of the non-administering members on the Trusteeship Council, as at the last regular session of the Council, were:
U Mya Sein (Burma).
Chiping H C. Kiang (China).
M. E. Arenales Catalan (Guatemala).
M. Max H. Dorsinville (Haiti).
Mr. V. K. Krishna Menon (India).
M. Rafik Asha (Syria).
M. V. F. Grubyakov (U.S.S.R.).

Mr. Russell: As several of those countries have no knowledge whatever of colonial administration, may I ask whether it is anybody's business to check the qualifications of those representatives and of those who are sent on missions to our Trust Territories and to make suggestions for improving them, as they know nothing whatever about the matter?

Mr. Harvey: I sympathise with my hon. Friend's point of view, but I do not think this House would agree that we ought to comment on the representatives of other countries.

Mr. Younger: Would not the Joint Under-Secretary of State agree that while


there may be difficulties about the question of qualifications the real issue is not one of qualifications but a political one? Is not the expertise supposed to be primarily supplied by the Administering Powers? Would it not be a mistake to suppose that this is simply a matter of individual qualifications?

Mr. Harvey: I think there is a great deal in what the right hon. Gentleman says.

Suez Canal (Israeli Shipping)

Mr. Janner: asked the Secretary of State for Foreign Affairs whether Egypt has yet given any undertaking to the United Nations organisation that she will comply with the demand of the United Nations to allow Israeli ships to pass through the Suez Canal.

Mr. Selwyn Lloyd: No, Sir.

Mr. Janner: In view of that Answer, will the right hon. and learned Gentleman see to it that, Article 25 of the United Nations Charter having been violated, special precautions will be taken, before Israel is requested to move from the straits at Aqaba, so that her shipping will be allowed to go through there, and that steps will be taken to see that her shipping will be allowed to go through the Suez Canal, when it is reopened?

Mr. Lloyd: So far as the first part of the supplementary question is concerned, the Prime Minister made the position clear in his statement to the House on Monday. The second matter is one which is very present to our minds.

Charter (Review)

Mr. E. Fletcher: asked the Secretary of State for Foreign Affairs the present policy of Her Majesty's Government with regard to the initiation of proposals for a revision of the Charter of the United Nations.

Mr. Ian Harvey: I have nothing to add to the statement on this subject made by my right hon. Friend the Minister of State in the debate on the Adjournment on 3rd December, 1956.

Mr. Fletcher: A good deal has happened since then. Does the hon. Gentleman not agree that the present constitution of the United Nations leaves a great deal to be desired and considerably

impairs its efficiency, and does he not think it a good thing that this country should take the initiative in proposing revisions to make it more up to date?

Mr. Harvey: We are perfectly aware of the difficulties arising from certain aspects of the Charter but at this moment we are not proposing to take the initiative in the matter.

Economic Development (Special Fund)

Mr. Moss: asked the Secretary of State for Foreign Affairs if he will make a statement on the Special United Nations Fund for Economic Development with particular reference to the British policy on the 39-nation resolution of 1st February, 1957, calling for the early drafting of a statute.

Mr. Blenkinsop: asked the Secretary of State for Foreign Affairs whether Her Majesty's Government will reconsider their decision not to contribute to the Special United Nations Fund for Economic Development, in view of the proposed cuts in defence expenditure.

Mr. Selwyn Lloyd: Her Majesty's Government consider that in present conditions it would be inappropriate to draw up a statute for the fund. There are still very substantial differences in the points of view of various Governments on the basic features of the proposed fund, and when the fund can begin operations circumstances may differ greatly from those obtaining now. As regards savings derived from the proposed cuts in defence expenditure, experts have estimated that the fund should have available to it not less than 250 million dollars for a start, and there would be a continuing commitment for contributions. Her Majesty's Government have accordingly no reason to alter their belief that only a programme of internationally supervised world-wide disarmament will provide savings on a scale sufficiently large to finance a fund of this nature.

Mr. Moss: Is it not a fact that suggestions have been made that the fund could be supported with less than 250 million dollars? May I ask the right hon. and learned Gentleman two questions? Has he any information whether a vote has been taken and whether the Resolution was passed or not? Secondly, will the right hon. and learned Gentleman study


the problem of making available in this country detailed reports of the speeches of our representatives, as I find it very difficult to get information?

Mr. Lloyd: If the hon. Member will have a word with me about the first matter, I will certainly see what information can be obtained. I am not certain to what vote the hon. Member is referring. As to the provision of copies of speeches made, my impression was that copies of the transactions in the various committees of the United Nations are placed in the Library of the House, but I will certainly go into that matter.

Mr. Blenkinsop: Is the right hon. and learned Gentleman aware that we on this side of the House regard it as complete hypocrisy on the part of Her Majesty's Government to keep on talking as though they approve the principle of this fund when in fact they make absolutely sure that there has been no movement at all to implement it over the last six or seven years?

Mr. Lloyd: There is a practical point here. Somebody has to find the money for this fund, and we are already overcommitted across the balance of payments in finding funds for development in the Commonwealth and elsewhere. Therefore, we are not in a position to take the initiative.

Mr. Younger: Nevertheless, is the Minister aware that his Answer was a very disappointing and stonewalling one? Is he not aware that there are at present proposals being discussed internationally both for aid to the Middle East and for putting the aid to certain dependencies in Africa on an international basis? Would it not be much more suitable if those things were done through an international body of the type of S.U.N.F.E.D.? Is it not time that we took the lead on this matter, particularly in view of the fact that, I understand, we shall save considerable sums on the provision of aid to the Middle East in the case of Jordan? Could we not give that to this fund?

Mr. Lloyd: I do not think that we should alter our present methods for giving such development aid as we can. But if there is to be a contribution by us to this sort of fund, we have to earn £500 million or so across the balance of pay-

ments to be available for this kind of activity. But we approve in principle and, if other people produce large sums of money to aid development, we should be very pleased to see it happen. We cannot do so at present.

Egypt and Israel

Mr. Janner: asked the Secretary of State for Foreign Affairs (1) whether Egypt has yet given any undertaking to the United Nations organisation that she will disband the fedayeen and not train any more of such persons for action against Israel;
(2) whether Egypt has yet given any intimation to the United Nations organisation that she proposes to withdraw her declaration of war against Israel.

Mr. Selwyn Lloyd: So far as we know, Egypt has never formally declared war on Israel. She has, however, maintained in the past that a state of war exists. I am not aware that she has yet given any indication to the United Nations either that she will declare that a state of war does not exist or that she will cease fedayeen activities.

Mr. Janner: In view of the negotiations going on at present and the statements which have been continually made by the Egyptian authorities that they are at war with Israel, may I ask the Foreign Secretary whether he will instruct our representative at the United Nations to see that a definite answer is given to this question by Egypt? Will he also ask that these bands of murderers who are being trained specifically in Egypt to cross the border shall be prevented from doing so?

Mr. Lloyd: I certainly think that this is a matter upon which there should be a clear statement as to the present position. Everything that we are doing is directed towards avoiding a situation in which the kind of raid and infiltration to which the hon. Member refers can take place.

Mr. Younger: Can the right hon. and learned Gentleman give an assurance that Her Majesty's Government are trying to get some formal statement by Egypt, preferably on the record of the United Nations, to the effect that she will play her part in observing the armistice conditions, including ending the state of


belligerency and ending attacks across the border as part of an overall settlement?

Mr. Lloyd: Most certainly we are.

Mr. E. Fletcher: Is it not the case that only a state of belligerency justifies on any footing the blockade of Israeli ships in the Suez Canal, and is not this exactly the situation that the United Nations ought to deal with in order to bring pressure on Egypt to put an end to it in the interests of world peace?

Mr. Lloyd: We certainly think that this question of belligerency is one which requires settling as quickly as possible, and we seek a solution under which neither side will claim belligerent rights.

Mr. Langford-Holt: If a state of belligerency is claimed by Egypt, what right has she to require that Israeli troops should be out of the Gaza Strip or the Sinai Peninsula?

Mr. Lloyd: That is a very fair point to make. So far as I understand the position, what a large number of countries at the United Nations are saying is that Israel broke the armistice agreement and therefore must return behind the armistice lines. That is the ground on which they put their case.

Mr. Gaitskell: Is the Foreign Secretary aware that I believe it to be the view of the House as a whole that this matter cannot be compartmentalised, and while it may be right that Israel should be asked to withdraw, there ought to be, in any such resolution, simultaneously, a demand that Egypt renounces belligerency?

Mr. Lloyd: I think that there should be, in any resolution, not only the requirement that Israel should withdraw, but also that the situation in the Gaza Strip and the Gulf of Aqaba should be covered. As my right hon. Friend the Prime Minister said on Monday, we regard that as a combined operation, and the whole of our effort has been directed to see that out of these discussions there shall come such a solution.

Mr. H. Morrison: Are we to understand from the Foreign Secretary that Egypt is claiming a state of war between herself and Israel—with consequences

which are not only injurious to Israel but are in conflict with the Convention of 1888—but that, at the same time, Egypt has never declared war on Israel, and when is this preposterous situation to end? May I ask the right hon. and learned Gentleman if everything will be done to unmask this somewhat irregular and hypocritical situation, and to see that real justice shall be done to Israel, who has been the real victim of aggression all the way along?

Mr. Lloyd: We certainly hope that such a solution will be found, because such a solution would be not only in the interests of Israel but, we believe, it would be in the interests of the Arab States themselves to get rid of this situation which has been poisoning the atmosphere in the Midle East. As the right hon. Gentleman will probably remember from the time when he held my office, the Government of Egypt did base their alleged right to stop Israeli ships going through the Canal on the ground that they were exercising belligerent rights.

Viscount Hinchingbrooke: My right hon. and learned Friend refers to what was said by the Prime Minister on Monday, but mentions only the Gaza Strip and the Gulf of Aqaba with reference to the requirement that Israel should withdraw. Are we to understand that the clearance of the Canal and the freedom of shipping through the Canal is not to be part of the package deal, because that is surely fundamental?

Mr. Lloyd: I certainly agree with my noble Friend that that is a matter of fundamental importance, but I do not think that it is part of this particular negotiation. We hope that when the Canal is cleared, and we shall do everything we can to see to it, there will be freedom of passage under the Constantinople Convention. But the United Nations has been dealing up to now with compliance with certain resolutions which were passed on various dates—there are very many of them—and those resolutions deal with the withdrawal of Israeli troops. What we have sought to inject into it also is a settlement of these other two matters, which we believe are interrelated.

Oral Answers to Questions — FALKLAND ISLANDS DEPENDENCIES (BRITISH SOVEREIGNTY)

Mr. Biggs-Davison: asked the Secretary of State for Foreign Affairs which Governments have formally signified their recognition of British sovereignty over parts of Antarctica; and which Governments have officially signified that they decline to do so.

Mr. Ian Harvey: Of the Governments having territorial claims in the Antarctic, Australia, New Zealand and Norway have recognized British sovereignty over the Falkland Islands Dependencies. Both Argentina and Chile have laid claims to sectors of this British territory.

Mr. Biggs-Davison: In view of the importance strategically and perhaps economically of Antarctica, and in view of the Answer which my hon. Friend has just given, can he give an assurance that the Government will be resolute to resist any encroachment upon British territories and interests in Antarctica under cover of the International Geophysical Year?

Mr. Harvey: Yes.

Oral Answers to Questions — EGYPT AND ISRAEL

Israeli Military Operations, 1948 (Anglo-Egyptian Treaty)

Mr. McAdden: asked the Secretary of State for Foreign Affairs if he will publish the terms of the ultimatum delivered to Israel in 1948 by His Majesty's Government regarding a withdrawal of Israeli forces from Sinai.

Mr. Selwyn Lloyd: I would refer my hon. Friend to the Answer given by my hon. Friend to my hon. Friends the Members for Aberdeenshire, East (Sir R. Boothby) and Hertfordshire, South-West (Mr. G. Longden) on 20th February.

Mr. McAdden: Is my right hon. and learned Friend aware that I have studied that Answer very carefully and that it is not at all clear from it whether any revelation was made to this House of the issue of the ultimatum at that time? In view of some of the comments that we have lately heard from hon. and right hon. Members on the Front Bench opposite about the issue of an ultimatum recently,

can my right hon. and learned Friend tell us whether the House was ever told about the issue of that ultimatum by the Socialist Government in 1948?

Mr. Lloyd: If my hon. Friend will put that question down I will try to answer it.

Suez Canal (Blockships)

Mr. Vane: asked the Secretary of State for Foreign Affairs how many of the ships wilfully and illegally sunk by the Egyptians in the Suez Canal had been prepared as blockships.

Mr. Selwyn Lloyd: The Anglo-French salvage unit counted 22 wrecks in Port Said and the United Nations reported 16 wrecks south of El Cap. Our own information shows that one wreck, the "Akka," was deliberately prepared as a blockship, being filled with concrete and towed into a planned scuttling position in the channel. She presented a very difficult problem in salvage but has now been raised.
At Port Said most of the wrecks had apparently been sunk in haste and by means of explosives. All but four obstructed the fairway to a greater or lesser extent. The position of the wrecks indicated a plan to form a series of barriers athwart the channel. Explosives had been left on board several of the wrecks. United Nations reports show that explosives also held up salvage work south of El Cap.

Mr. Vane: Will my right hon. and learned Friend send copies of that reply to Mr. Dulles and Mr. Hammarskjold?

Oral Answers to Questions — ITALY (SOUTH TYROL)

Mr. Warbey: asked the Secretary of State for Foreign Affairs what references have been made to Her Majesty's Ambassador in Rome, under Article 87 of the Italian Peace Treaty, since that Treaty came into force, regarding the extent to which the measures for the protection of the rights of the German-speaking population in South Tyrol, as laid down in the Paris Agreement annexed to the Treaty, have been put into effect.

Mr. Ian Harvey: None, Sir.

Mr. Warbey: In view of the fact that the Italian authorities recently prohibited a demonstration of the South Tyrol People's Party and more recently arrested the editor of its German-language newspaper, will not the Government call for a report from the British Ambassador in Rome on the extent to which the Italian authorities have carried out their obligations under the Paris Agreement?

Mr. Harvey: No. This dispute has been going on for a considerable time and both countries are in diplomatic negotiation with each other, and I see no reason for us to intervene.

Oral Answers to Questions — BAHRAIN (RULER'S ADDRESS)

Mr. Warbey: asked the Secretary of State for Foreign Affairs whether he will publish the text of the Address presented to Her Majesty on 18th December by the Ruler of Bahrain acting in accordance with the procedure laid down in the Colonial Prisoners Removal Act, 1869.

Mr. Ian Harvey: Yes, Sir. As the document is in Arabic the original is not of much service to the majority of hon. Members, but I have arranged for a translation to be available in the Library of the House.

Mr. Warbey: While I am grateful to the hon. Gentleman for agreeing to publish this document, which I was not able to obtain when I first applied for it in the Library of the House, may I ask whether the document will make it clear that the Government have acted illegally in transporting three Bahraini convicts to St. Helena for incarceration for 14 years?

Mr. Harvey: The hon. Member asked whether we would publish the document, and I answered, "Yes." What views the hon. Member may form on the document will depend upon his reading it.

Oral Answers to Questions — ADEN-YEMEN FRONTIER

Mr. Brockway: asked the Secretary of State for Foreign Affairs if he will make a statement on the progress of the attempt to secure negotiations for the definition of the Aden-Yemen frontier.

Mr. J. Johnson: asked the Secretary of State for Foreign Affairs what steps he is taking to implement the provision of the 1951 exchange of notes with the Yemen Government, that various disputed parts of the de facto frontier between the Yemen and the Aden Protectorate should be demarcated on the ground by a joint Anglo-Yemen Commission.

Mr. Selwyn Lloyd: The question of frontier demarcation is bound up with the more urgent problem of first restoring peaceful conditions along the whole frontier. On 12th February a Note was handed to the Yemeni Chargé d'Affaires proposing that talks should begin on 23rd February or any other early date at Mukeiras or Sanah in the Aden Protectorate. A reply was received from the Yemeni Charge d'Affaires on the evening of 26th February, that is to say last night, and is now being studied.

Mr. Brockway: Is the right hon. and learned Gentleman aware that many of those who are following events in the Yemen are very disturbed by the methods which are being adopted and by their effects, as illustrated in the bombing of the village of Danaba when, one admits gladly, notice was given of the bombing but where, on a village of 120 people, 96 500 lb. bombs were dropped? Does the Minister not think that in view of these facts we should make some effort to brings these negotiations to a peaceful settlement?

Mr. Lloyd: I cannot admit what the hon. Member has suggested about this method of seeking to keep law and order. I am told that there are 16 houses in the village, and repeated warnings were given. In many ways proceeding in this way after due warning is the best method of dealing with a difficult problem. I entirely agree with the hon. Member, however, that we want to have these negotiations set on foot and completed as quickly as possible, We want a state of affairs in which the frontier has been demarcated, and we have been anxious over a period of years to get that done.

Mr. Johnson: Is it not a fact that the Yemen Government have never accepted the existence of a boundary between Yemen and Aden, and does the Minister not think that, whether there is pacification or otherwise in the near future, the matter had better be put in


the hands of a third party and that a United Nations commission should go there and look at the matter impartially above the participants now locked in combat?

Mr. Lloyd: No, Sir. I do not think that that would be the better course.

Oral Answers to Questions — BRITISH INFORMATION SERVICES, UNITED STATES (CYPRUS)

Mr. Russell: asked the Secretary of State for Foreign Affairs to what extent space in American newspapers, and time on American radio and television networks, have been bought by British Information Services to explain the Government's policy regarding Cyprus.

Mr. Ian Harvey: None, Sir.
The effectiveness of the British Information Services in the United States depends upon their being regarded by the American Press and radio as a source of reliable information about British policy and opinion. It is not considered that the use of commercial advertising or the buying of space either in the Press or on radio or television would be the most efficient way of achieving the desired result.

Mr. Russell: Is my hon. Friend aware that much space is taken in newspapers like the New York Times and the Herald Tribune by various organisations acting on behalf of Greek Cypriots to put their case on the Cyprus issue? Would it not be wise if some action were taken to counter those arguments?

Mr. Harvey: I quite see my hon. Friend's point, but we have to judge by results, and I do not think that the results of this activity would jusify our copying it.

BUSINESS OF THE HOUSE

Proceedings of the Committee on Cinematograph Films [Money] exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. R. A. Butler.]

CINEMATOGRAPH FILMS BILL [Lords]

Order for Second Reading read.

3.35 p.m.

The President of the Board of Trade (Sir David Eccles): I beg to move, That the Bill be now read a Second time.
This Measure comes to us improved by Amendments from another place, and hon. Members will agree, I think, on reading it, that the language in which it is drafted is admirably lucid and straightforward. But, if the text is clear, the subject with which it deals is not. I have been looking back through HANSARD, and I see that the difficulties of producing films in Britain rouse fresh debates at frequent intervals. I see, too, that many hon. Members are experts in this tangle of domestic finance and international competition. I am far from that. I am a novice in this business, and at first sight I wondered why we should have this Bill at all.
In my early days in the City of London I heard the late Mr. Solly Joel say that everybody ought to have a stake in the entertainment business, because the only things one could be certain that men would pay for in good times and in bad were wine, women and song. Alas, experience has taught me that Mr. Joel's advice was good for the Chancellor, but not so good for the youthful investor. The truth is that show business is as risky as it is popular, and that is why we have to have this Bill.
Inside the film business there are two distinct industries; there is the production of the films and the exhibition of the films. This is a producer's Bill, but we must not forget the exhibitors. Indeed, I think that some hon. Gentlemen are likely to argue that rather than help the producers through this Bill it is more urgent to help the exhibitors through the Budget. I think, therefore, that I should begin with a word about the cinema exhibitor who lives on his net earnings after the deduction of all taxes and such-like. It is, in fact, the same to the exhibitor whether his gross takings are reduced by the Entertainments Duty or by a combination of the Duty and the levy. Lately. his net earnings have been declining, and


that has become a serious threat to the existence of a number of our cinemas.
My right hon. Friend the Chancellor of the Exchequer, having had the advantage of fathering the Bill as President of the Board of Trade, is aware of this situation, and he has authorised me to say that in his Budget he would take account of the consequences of Clause 2—that is, the Clause which fixes the limits of the levy and makes it statutory—together with the other considerations which the exihibitors have brought to his attention.
At the same time, it is right to distinguish between the chicken and the egg; between the supply of good films and the level of attendances at the cinemas. Assuming that we do want a proportion of British pictures to be shown in our cinemas then, unless there is a steady supply of such pictures—and they appeal to the public—no reduction in the duty will save the exhibitors, subjected as they are to growing competition.
Therefore, if we concentrate today on the production of films we are, in a sense, putting first things first. If the Bill takes a cut from the box office and, in return, better films are produced, that will be a good bargain for the producers, exhibitors and the Chancellor. Every film is made to measure.

Mr. John Rankin: Will that be used by the Chancellor as a get-out from the statement to which the right hon. Gentleman has already committed him?

Sir D. Eccles: My right hon. Friend does not intend to get out of any of his statements.
I was saying that the characteristic of a film is that it is not mass produced. It is an individual production. How much it will earn in cash depends on the fickle taste of the public and, as with all show business, there are bound to be some expensive failures. Because a film can cost such a lot of money, the size of the home market is an important factor in the stability of the production industry concerned. Here, as we know, the Americans have had a big advantage over us.
It has often been said that Hollywood can cover all its costs in North America and can, therefore, look to earnings overseas as pure profit. We also know that

Hollywood has had its own troubles, and in recent years the competition of television has forced large and, I think successful, changes in the making and showing of American films. Nevertheless, one quarter of all the cinemas in the United States have closed. British cinemas are also hard-hit by television. Some picture houses have gone out of business and some are hanging on with great difficulty, but I hope that tomorrow morning they will feel more cheerful—[HON. MEMBERS: "Why?"] Because I have said that the Chancellor will take account of Clause 2 in his Budget.

Mr. Rankin: Will he reduce the Entertainments Duty?

Sir D. Eccles: There is no other way that he can do it.

Mr. Frank Beswick: Will the right hon. Gentleman repeat his last few words?

Sir D. Eccles: I said that the Chancellor said that he would take account of that. The hon. Gentleman can wait for the Budget, when he will see what it means.

Mr. Douglas Jay: Surely the President of the Board of Trade will elucidate his words? Did he or did he not say that the only way the Chancellor could take account of the consequences of this part of the Bill was to reduce Entertainments Duty? It is very important.

Sir D. Eccles: I should have thought that it was very difficult to think of any other way. The right hon. Gentleman is very ingenious and perhaps, with his experience of the Treasury, he can think of another way. If so, no doubt my right hon. Friend will be grateful for his suggestion.
Today, what we are doing is helping the cinemas by considering how the number and quality of films which they can show can be improved. We know that the public have liked the best American films. That is a legitimate demand and the problem is both to meet it and, at the same time, build up an efficient, thriving British film industry.
For the second purpose, we have devised three instruments, the quota


reserved for British films in each programme, the National Film Finance Corporation, and the levy. The Bill is concerned with all three, Part I with the levy, Part II with the N.F.F.C., and Part III with the quota. I want to say about the quota that the present Bill was an opportunity not to be missed of making this form of protection safe for ten years. That is done in Clause 14. The details of the quota legislation will be fully discussed with the interests concerned and the producers, distributors and exhibitors can be assured that all their points of view will be carefully examined before these details are settled. This reserve quota is a sort of built-in form of protection, but it is not enough to ensure the finance necessary for an efficient British film industry.
What other form of aid can we give? One first thinks of a tariff, but, unfortunately, a Customs Duty on films imported into this country is a clumsy weapon, not to be recommended, because nobody can say at the time of entry what a film is worth, and therefore, one cannot impose an ad valorem duty. It is also undesirable to give British films a direct Government subsidy. Subsidies are a game which two can play, as we saw last week when we discussed the anti-dumping Measure, and the House knows that it is British policy to eliminate all artificial aids to exports in all countries. Accordingly, Clauses 10 to 13 are designed to remove the taint of subsidy from the National Film Finance Corporation. I will say something about the Corporation when I have dealt with the levy.
The logical basis of the levy as a form of assistance to British films is that it is collected from the receipts of all films shown in this country, but paid only to films made in this country. In that ingenious way, foreign films which have entered this country without a Customs Duty make a contribution to British film production.

Mr. Beswick: Is that quite true? Is it not payable to films made, for example, in a colonial or dominion territory?

Sir D. Eccles: It may be in some cases, but I am not sure. We will certainly look at all those questions when we come to make the new regulations.
Up to now, the levy has been voluntary and is expected to yield about £2½ million this year. That represents a considerable achievement in voluntary co-operation. It has imposed an increasing strain upon the exhibitors, and the industry told my predecessor that it would not be possible to continue the voluntary levy after this year. That put the Board of Trade in a difficulty. We were faced with the choice of abandoning the levy altogether, with all that that would mean for British film production, or making it statutory. I am sure that we are right to have chosen the second course and in Part I of the Bill the levy is made statutory.
Clause 2 fixes for the next ten years the upper and lower limits of the levy at £5 million and £2 million. This is done to give producers and exhibitors outside figures on which to base their long-term plans. For the first year's levy, which we intend to start next October, again so that the industry may have something definite to work on, we have chosen the figure of £3¾ million, which is £1¼ million more than the voluntary levy is likely to yield this year. All three figures are, in a sense, guesses about future costs and about future levels of demand and output. They are open to argument and no doubt we shall discuss them in Committee. This afternoon we have to settle the point of policy. Do we really believe in the future of British film production? Is it worth putting any more money into this business? Those are the essential questions to which I hope the House will give a unanimous answer.
I should like to review quickly the position as I see it today. In spite of the competition of television, British films have been gaining some ground both in the home market, where I am told that the 30 per cent, quota is frequently exceeded, and overseas. We have a good market in the Commonwealth. Little by little British pictures are winning a toehold in the United States.

Mr. Rankin: Very little by very little.

Sir D. Eccles: They are earning £1 million a year in the United States.
Now we have put our hands to the European Free Trade Area. As I am sure hon. Members know, the film producing countries who are members of O.E.E.C., like ourselves, protect their local markets from crushing American


competition. Just how films will be treated in the coming negotiations with Europe I cannot yet say, but I can say this: Her Majesty's Government would like to see free trade in films. Then the best pictures will win, and with this Bill on the Statute Book our producers would have the necessary backing and security to do well in the expanding markets across the Channel. Those producers whom I have consulted about the European Free, Trade Area welcome it and think they will do well out of the opportunities which will certainly arise.
I therefore look upon the levy not as a form of statutory assistance to bolster up a wilting industry but as a good speculation on a progressive section of British show business. Of course, the House is being invited to take part in a gamble, but it is not an unreasonable gamble, particularly because the international opportunities are increasing. If we had merely our home market to look to, with a possible decline in bookings, it would be a doubtful gamble, but if we add to it the expanding opportunities overseas I think it is a reasonable gamble.
One must ask the question whether the figures in Clause 2 relating to the size of the levy are well chosen. I have thought a great deal about this, I have consulted a great many people, and on the evidence which I have been able to get, £3¾ million for the first year is about right. That is to say, it should be a stimulant but not a drug to efficient production. I should also remind the House that if the Entertainments Duty were reduced the producers would get a further sum, since a film earns a percentage of the box-office takings after deduction of Entertainments Duty. I am sure the possibility of that interesting bonus will not be far from hon. Members' minds.
I turn to some details of finance. When the Labour Government set up the National Film Finance Corporation there was no levy. The risk was, therefore, great that a film would fail to earn enough to cover the cost of production. Under those conditions it was not surprising that the Corporation was to lend only to producers who could not get their money elsewhere and that in doing so the Corporation made losses.
The voluntary levy, when it came in 1950, improved the prospects of recouping the money advanced for production.

If this Bill becomes law, the levy will be statutory for ten years, the amount of the levy will be increased immediately, and, thereafter, it can be increased to twice the sum collected voluntarily or reduced if the industry shows that it does not need so much money. In future, therefore, the Corporation should have a very fair chance of making both ends meet. Now that the levy is to be statutory. there is no reason that it should not aim at the status of an ordinary institution not in need of further Government help.
In these new conditions we have thought it right to provide for the sale or the winding-up of the Corporation should it prove that this special form of finance is no longer needed. As I said earlier, the provisions in Clauses 10 to 13 make it clear—and it is necessary to make this clear—that the Government do not intend to subsidise the production of films through the Corporation.
A word about the Corporation itself. From more than one quarter I have heard how well the Corporation has discharge its duty and how highly it is regarded by the producers. To get the other side of the picture I asked the able Chairman of the Corporation what he thought of the producers. Bankers usually know more about their customers than their customers think they do. I put these three question to Sir Nutcombe Hume: first, were production costs still extravagant? Secondly, were the British film producers technically efficient? Thirdly, assuming that this Bill became law, did he see the output of new films rising or falling?
His replies were reassuring. He said that most of the extravagance had been squeezed out by stricter financial control. As to the level of efficiency compared with that of Hollywood, he said, first, that it was not true that the Californian climate gave the Americans a start which we could never make good. That bogey, he said, had been disposed of. Secondly. he said, British techniques and know-how were getting better all the time. We had some first-rate technicians and artists coming along, and on a value-for-money basis—and this is what one seeks to find out from a banker—it was now definitely cheaper to make a picture in England than in America. Indeed, he believed


that American companies would continue to produce here for reasons of cost alone.
I must interject, however, that British production is still handicapped, perhaps a little less than it was before, by restrictive practices. There is no room for such practices in our challenging times. Those who cling to them risk the destruction of the industry they serve, and it would be well if they remembered that we shall soon have to compete not only with American costs but also with European costs.
Finally, I asked Sir Nutcombe Hume whether, in consequence of Part II of the Bill, he contemplated any change in the Corporation's policy towards borrowers. He pointed out that, provided costs did not rise, film production would become a little more attractive on account of the increase in the levy. He said the Corporation had no intention of changing its policy. It would continue to help starters in film production and it would not turn away any deserving applicant. In his view, the number of first and second feature films produced was more likely to rise than to fall. He was, however, emphatic on one point: he said that more vigorous salesmanship abroad was essential to the healthy expansion of this industry.
I thought that the House would wish to have this information from the Chairman of the Corporation because, for obvious reasons, there is no means of securing a worthwhile guarantee from producers that they will make a definite number of films over the next few years.

Mr. Glenvil Hall: All this is very interesting. Did the Minister ask the Chairman whether he could visualise a time when the Corporation would cease to exist for lack of applicants?

Sir D. Eccles: Indeed, no; the Chairman was optimistic about the number of projects for making films which he would receive. I have looked at the queue which is now at the door and I would tell the right hon. Gentleman that it appears that over the next year or two production is going to go up; before the Bill is on the Statute Book, indeed.

Mr. Glenvil Hall: The projects will need financing.

Sir D. Eccles: They will need financing, true, and it is the purpose of the Bill to make it easier for them to get that finance.
I think that the Chairman would also agree, if I put it to him, that it is part of our policy that the independent producer should get the money to be able to survive and compete, and he undoubtedly will see that that occurs through his lending policy.
Coming back to the levy—it will be collected by the Customs and Excise who, in Clause 4, are given powers to obtain the necessary information. The House will have noticed some words in Clause 2 3, b) which were inserted in another place. The duty is there laid upon me to have regard, in determining the amount of the levy, to the prevailing economic circumstances of both producers and exhibitors. I am also bound to consult the Cinematograph Films Council before regulations are made setting out the terms of the levy.
This is an important point, because it it here that I shall be able to do something for the small cinemas. Representing, as I do, a county seat with small towns and rural areas, I am aware that the small cinema has particular difficulties, and I hope that the regulations to be made under Clause 2 will provide for exemption and relief for exhibitors upon whom the levy would bear harshly.
The levy will be distributed by the British Film Fund Agency, which is to be set up under Clause 1 and will be composed of three persons not connected with the industry. They will work under regulations which will be made under Clause 3, after consultation with the Council, and those regulations will be subject to an affirmative Resolution of Parliament. As the House has seen in the Bill, the grant to the Children's Film Foundation Limited will continue. I think we would all agree that that is a good thing. The Parliamentary Secretary will have more to say later about the composition of the Agency and the way in which it will work.
I should now like to say a word about the general prospects of making pictures in Britain.

Mr. Stephen Swingler: I have listened to the right hon. Gentleman very carefully upon the subject of the levy and its distribution. He


said, earlier, that he was against any form of subsidy for film production. Will he explain to the House what is the difference in principle between this Bill and a State subsidy? The levy will now become a tax similar to Entertainments Duty, enforced upon all exhibitors, and the revenue will be distributed to the producers under regulations made by his Department. What is the difference in principle between that and a State subsidy paid out of taxation?

Sir D. Eccles: I would agree with the hon. Member that if one is at the receiving end a £5 note from anywhere is a £5 note. But if one's business is to define what ranks as a Government subsidy—and that is necessary in regard to negotiations with other countries—this Bill does not provide a Government subsidy and it therefore has some advantages which only those who conduct these discussions can appreciate. I admit that I am new to them myself.
I was about to speak about the future of making pictures in this country. It is true that, up to now, our cinemagoers have preferred American films. That is why we have had to have the 30 per cent. quota. It is also likely that the Americans will beat us in making spectacular and grandiose pictures, which cost a very great deal of money. But in this country a quiet revolution in taste is going on. I saw it at first hand at the Ministry of Education. Everybody knows that, compared to a generation ago, our children are better fed and better dressed, and their parents are buying better furnishings and taking more interesting holidays. But something else is happening. The school children of today are learning at an astonishing pace about art, music and drama.
It is only when these children are grown up and have made their own homes that we shall see the full results of the new awareness of what is good to read, to hear and to see.

Mr. Beswick: Does the Minister agree that he should make one very important exception? I agree with most of what he has said, but does not he also think that many children today are being despoiled by the average film shown on television, especially on I.T.A.? Does not he think that that is something which ought to be taken into account?

Sir D. Eccles: At any age there will always be some vulgar and bad things made and shown in one way or another, and no doubt there are some now. I was merely observing that, in my view, the trend is towards better taste. The enthusiasm for British ballet which is now so marked is, I think, a portent of what might well happen in other fields of art and entertainment. What the radio has already done for music the screen has still to do for the visual arts.
Will the film industry, seizing its chance, be found on the side of this revolution in taste? That I cannot foretell, but I hope that the House will agree that to anticipate, express and encourage the higher standards of our boys and girls coming from the secondary schools the film industry will need to give new and young men and women a chance as producers and script writers. In the final analysis this industry will stand or fall by the quality of our artistes.
No one can be sure how, in ten or twenty years' time, the public will prefer to be entertained. We do not know whether they will prefer the live theatre, the cinema, television, plain or coloured, dance halls or fun fairs. What is certain is that show business, like everything else, will become more and more international, and that that country will hold its own which has looked after its artistes, musicians, writers and players. In a small way that is what the Bill is intended to do.

Mr. George Jeger: I have followed the remarks of the Minister with great care, and I am in agreement with almost all that he has said, but I find it difficult to square what he has just said with his policy of "treating them mean and keeping them keen." How does that apply to our artistes at present?

Sir D. Eccles: I was just about to say that I had not forgotten that films belong to Commerce rather than to the Arts. They are not made for museums; they are made to make money. Therefore, the producers must stick to the old themes: sex, crime, military exploits and practical jokes. Those always have been the stuff of drama, from "Henry V" to "The Battle of the River Plate", and from "The Taming of the Shrew" to "High Society".
What does change, and changes right round from good to bad and from bad


to good, is the art and the taste with which these immortal themes are presented. We have been going through a bad patch, I think a very bad patch, in public taste, but I believe that taste is now improving in this country. If that is true, the British film industry is well placed to respond to the higher standards demanded by the public. Not only at home but abroad are there prospects of freer trade in films. Why should not this country become an international centre of film production. financed here, and drawing its personnel from our own excellent talent and from overseas? That is the aim that we ought to set before the industry.
The summary of my argument for the Bill is that it assists generously the cash side of what may be a most interesting ten years in British film production. Paying due attention to the risks involved, I commend the Measure to the House as a calculated speculation.

Mr. Harold Lever: Has the Film Finance Corporation become possessed of any scrip or shares by reason of the powers granted to it in the 1954 Act?

Sir D. Eccles: I shall have to ask the Parliamentary Secretary to give the hon. Gentleman that information, because I have not it at this moment. When my hon. Friend winds up the debate, the hon. Gentleman will no doubt get the answer, if he is here.

4.12 p.m.

Mrs. Eirene White: On this side of the House we welcome the Bill which the President of the Board of Trade has placed before us; at least Parts I and II of it. On Part III our feelings are a good deal less cordial.
As the right hon. Gentleman has said, the main object of the Bill is to assist the production of British films. As one who has had some connection with this industry for a number of years, through the Cinematograph Films Council, I am very glad that the state of British film production is a good deal healthier than it was some while ago. It is only fair to pay some tribute to the very close concern shown for the industry when we were in office by the late Sir Stafford Cripps and by my right hon. Friend the Member for

Huyton (Mr. H. Wilson), both of whom took a very keen personal interest in the affairs of British films. I can only hope that the present holder of the office, who admits that he is a novice in the matter, will follow their very good example.
The British film industry is faced with a number of problems, many of them of long standing. The President of the Board of Trade has touched upon some of them. We have not, as the American industry has, a very large home market from which we can be reasonably certain of getting an adequate return. Our tax position is far less favourable than in the United States. I do not wish to anticipate the speech which I hope I may be able to make, with the kind co-operation of the Chair, on the Budget. I will not go so far as the right hon. Gentleman has gone in anticipating the Budget Speech of the Chancellor of the Exchequer; but it is clear that a debate on the Bill would be completely unrealistic unless we had assurances about the tax position.
At present, the British film industry has to face not only this very heavy tax burden but the competition of television. No one can yet say just what the relationship will be between the cinema and television. I think that many years will pass before television can show pictures in any way approaching in quality the pictures that one can see in the cinema. Both in reproduction and in general quality I doubt whether television will ever seriously rival the best cinematograph films.
The cinema has some obvious advantages over television. It is incontrovertible that one does not get the same thrill holding hands in front of a television set as one does holding hands in the cinema. I do not know whether the right hon. Gentleman has ever experienced that simple pleasure, but if he has he will know what I mean. However, the cinema cannot live on courting couples alone. There is no doubt that exhibitors are facing very serious difficulties and feel that they are being ground between the upper and nether millstones of television and Entertainments Duty. It is against that background that we have to consider the Bill.
The right hon. Gentleman gave us what I could not help feeling was an extract from a prize-day speech that he had not had the opportunity to deliver before his


change of office. He skated very rapidly over some of the problems inherent in the Bill. For example, we are very much concerned about the timing of the Bill, in more respects than one. I shall be glad to have an explanation about the intentions of the Government during its remaining stages. Part II ought to come into effect not later than midnight on 8th March, that is to say, on Friday of next week, because the National Film Finance Corporation ceases to exist legally, as I understand, when the Cinematograph Film Production (Special Loans) Act expires, which it does on 9th March.
If that is so, we should have been told by the right hon. Gentleman why either we have to take all the remaining stages of the Bill between Monday and Thursday next week—Friday being private Members' time—or the powers of the National Film Finance Corporation expire. I understand that we may get the answer at the end of the debate, but we are entitled at the opening of the debate to the courtesy of being told why the Government have failed to obtain this legislation in time. [Interruption.] Oh, perhaps we can have the explanation now. Well, come along.
We ought to be told. I gave way to the Parliamentary Secretary. Either the National Film Finance Corporation must be indemnified—for the salaries of its staff, for example—when it ceases to exist as a legal entity, or it must cease operations altogether for a couple of weeks at least. Whatever the position, the House is fully entitled to an explanation of this situation. After all, the Board of Trade has known since 1954 that the National Film Finance Corporation was due to expire on a particular date. Surely it was within its capacity to obtain its legislation in proper time.
That is one muddle. The other muddle is over Part Ill. It was monstrous of the right hon. Gentleman to slither over this position by saying that the Bill was an opportunity not to be missed to extend the quota provisions of the Cinematograph Films Act. Nobody wants the quota provisions not to be extended, so far as I am aware. We support the continuance of the quota, but anyone with experience of the industry knows there are difficulties, which have been evident for some years, over the operation of the quota.
Again, it has been perfectly well-known in the Board of Trade that the Act governing the quota is due to expire in 1958, and that legislation was, therefore, required. It seems to me to be really scandalous that there should be such delay over this. We are asked here to pass a Bill which includes, among other things, in Clause 3, a definition of classes of British films, so that we can in one case discuss what is or what is not a British film for purposes of the levy, but we cannot, at the same time, discuss what is or what is not a British film for the purposes of the quota, because that legislation is not ready. There has been ample time to discuss all these matters with the associations in the trade. Everybody has been perfectly well aware that a time table was needed; everybody, apparently, except the Board of Trade.
We have no guarantee when legislation will, in fact, be introduced. We are told that talks are to begin with the industry next autumn, but no one has so far, at any rate, given us any guarantee when the actual legislation is likely to come about. I think I should say that my right hon. and hon. Friends and myself, when we come to the Committee stage of the Bill, will introduce Amendments to Part III to try to limit the time, so that we may have some assurance of legislation actually being produced, and not being put off because of the congestion of the Parliamentary timetable, which is the usual excuse. We are entitled to say, on the timing and management of this legislation, that we feel very dissatisfied with the way in which it has been handled.
Having said that about the manner in which the Bill has been introduced and the deficiencies in it, I now turn to the main purposes of the Bill, with which, as I have said we are in general sympathy. It is only natural that we should be, because the two parts of substance in the Bill are, of course, concerned with matters which were introduced by the Labour Government. The levy, admittedly on a voluntary basis, and the National Film Finance Corporation were both steps taken by the Labour Administration, and we believe that both were very helpful ideas for promoting British film production.
The President told us why it is now necessary to have a statutory provision


for the film production levy. I know that there are certain sections of the industry which would very much prefer that there should be a direct Government payment instead of this rather roundabout method of picking up a remission of Entertainments Duty with one hand and handing out the levy with the other. We realise that the voluntary scheme, which has worked for some seven years, has now reached a point at which it would be difficult to continue it.
I should like, however, to pay tribute to the trade for the work it has done for the past seven years. It has done an exceedingly good job, and I refer both to those who have served on the body dealing with the levy and also the renters, for example, who have given particular help in certain instances, without which it would have been even more difficult to run a voluntary scheme, than it has proved to be. It is only right to pay that tribute to the trade.
At the same time, I think we recognise that something of a statutory nature is needed. I wish myself that it were possible to eliminate all this extremely elaborate machinery of collection and distribution which we are setting up in this Bill. I wish, also, that it were possible to give a greater degree of certainty to producers than I think will be possible under any form of levy, but I will return to that point later. I recognise that we are under certain obligations internationally, and that this is presumably the best way to deal with the situation.
Therefore, on balance, we accept the levy in principle, although we recognise the force of the objections which have been made by certain sections of the industry, in which it is said that this is an extremely elaborate and expensive method of doing something which those affected would prefer should be done much more simply.
Having said that we accept the principle of the levy, I cannot pretend that we are entirely convinced about the machinery which is proposed for dealing with it. Clause 1 of the Bill sets up an Agency, which is to consist apparently of three wise men, none of whom has any connection with the industry. I had some little experience of the affairs of this industry. I have

never had any financial or professional connection with it, but I have had a good deal of experience of the way it has worked from my membership of the Cinematograph Films Council, and I will say most emphatically to the President of the Board of Trade that I do not believe that any body such as this Agency can be expected to work efficiently without some advice from those who have first-hand and up-to-date knowledge of the trade.
This is a most complex industry, which is riddled with anomalies of one sort or another, and I was completely unconvinced by the arguments put forward in another place that this work of the Agency in paying out money from the film production fund would be purely an accountant's job. It may appear to be so, but so many things that appear simple when one first looks at them in the cinema industry turn out to be extremely complex. I have had discussions with some of those who have been responsible for administering the present voluntary fund, and they assure me that it is far from being purely an accountant's job. It is not just cut and dried. It is not the case that what is needed is a certain set of figures and the making of the necessary calculations, and that is the end of it.
I will give only one example, and it is one which, I know, has been very much worrying those who have been running the voluntary scheme. It is the common practice in the trade for films to be booked as a complete programme; in other words, one has the first feature and the supporting programme as well, and the whole thing is offered as a complete programme. The sum is paid to the renter for the programme as a whole. Who is to decide on the sub-division of the total rental? Who is to know whether the sub-division is really what it ought to be?
This may be very important, because one of the two or more films may be eligible for a payment out of the fund and the others may not. We might quite easily have the position in which there would be at least the temptation to load one film; in other words, to pay a greater proportion of the rental on that film than it would normally be entitled to to obtain a higher levy payment. That is something which, however competent


he may be at his jab, an accountant simply could not judge.
This question of what is the true rental for a particular film is a very difficult one. One has to know a great deal of what current rentals are. One has to know something about the ups and downs of film fashion, and so forth. It is not a straightforward matter. I put it seriously to the President of the Board of Trade that he ought not to accept the argument that the work of the Agency can be done by persons who have nothing to do with the industry. I think it was suggested that a lawyer, an accountant and a retired civil servant would be the ideal triumvirate. That really could not do the job satisfactorily and nor would the trade have full confidence in such a body. It is important that the trade should have confidence in the Agency.
From the more negative point of view, if there should be any persons who feel tempted to do a little bit of adjustment in film rentals they would be much less likely to do so if they knew that some of their trade brethren were aware of what they were doing. Therefore, I think it would be a very useful precaution to have persons who are active in the trade associated with the Agency. That is to say, if we need an agency at all. We on this side of the House are not fully convinced that we do need one. Why should not the Board of Trade itself carry out these functions with the advice, if it so wishes, of a committee of the Cinematograph Films Council, or alternatively, of people selected from nominees put forward by the trade?
On the quota legislation, which, again, on the face of it, may look as though it is a pure accounting matter, we have that system working, and I think it is working reasonably well. The Board of Trade administers the regulations, but it has the advice of a committee of the Cinematograph Films Council, which has full knowledge of what goes on in the industry. So far as I can judge as a lay, independent person that work is carried out perfectly satisfactorily.
I am not at all convinced by the arguments put in another place that we need the Agency as a body because its members have to be the trustees of this fund. I should have said that there is much more to be argued in favour of running

this directly by the Board of Trade with adequate trade advice. In any case, whichever method one chooses, the question of adequate trade advice is really important, but I felt it was brushed aside far too cavalierly in arguments in another place. I am certain that the trade does not believe that this mechanism can be worked satisfactorily unless there are people with close knowledge of the trade associated with it. I hope very much that the Minister will have second thoughts on this matter. We do not feel at all happy about the main point in Clause 1.
When one turns to Clauses 2 and 3 one is struck by the fact that a very large sphere is to be dealt with by regulations. Primarily, this is an enabling Bill; there is very little written into the Bill. We are asked to agree to a Bill in the most peculiar circumstances. We are asked to pass it knowing that it will be impossible to carry out, unless the Chancellor of the Exchequer takes certain action about which we can have only the most limited assurances. We are also asked to pass a Bill which is very indefinite as to what will be done in some very important particulars.
Matters dealt with in Clauses 2 and 3 are the very kernel of the Bill, but we have had very little assurance—in fact, virtually none—as to what the Government have in mind about the regulations. If one takes the regulations which the Board of Trade is to make, there is the whole question of exemptions to consider. The right hon. Gentleman evidently has a soft spot for some of the smaller cinemas in his constituency. That is well and good, but we should like to know more than that. We should like to know on what sort of principle the exemptions are to be based. Surely the House is entitled to be told something of what the Government have in mind, even if we cannot be given the full terms of the regulations.
It is less than fair to ask us to pass a Bill of this kind without being more specific as to what principles the Government propose to follow in making regulations. There are certain exemptions at present under the voluntary scheme. Are those exemptions the ones which, in general, are to be followed under the regulations? What is to be the position of certain special people? As a Welsh Member, for example, I have in mind the


miners' welfare cinemas. I should very much like to know what is intended about those. They serve a particular social purpose in mining areas. If we are asked to pass a Bill of this kind we should certainly be given some further information.
Another thing which is left completely vague is that the Board of Trade is to make regulations about what the Customs and Excise is to collect, but what is to happen if someone does not pay the levy? Is there to be a sanction and, if so, what kind of sanction? Under a voluntary scheme it is a different matter, but this is to be a statutory scheme. We should be told what the Government have in mind if for some reason or other exhibitors say they are not able to pay the levy. Under the voluntary arrangement renters have made certain concessions to exhibitors who have not been in a position to pay. Obviously, that can hardly be expected under a statutory scheme, but we should be told what the Government think about it. We have been given so little detail on all this that it is very difficult for the House to make up its mind.
When we turn to the other side of the picture, the paying out side as opposed to the collecting side, the matter is left completely vague. In fact, it is left even more vague than on the collecting side. Under Clause 3, by regulation the Board of Trade may do various things. It is not even mandatory, but is permissive. We are not certain that the Board of Trade will even be obliged to make regulations to deal with certain extremely important matters. To give an instance, there is the whole question of defining classes of British films. I do not want to go into that in detail, because I think that some of my hon. Friends may wish to raise it, but it is extremely important to know whether certain films which now are considered to be British films ought to participate in the levy without any further conditions whatever being made.
It has been suggested that they should participate in the levy only if a certain proportion of their takings for showings outside the United Kingdom are remitted to the United Kingdom and there are various other considerations. I do not propose at the moment to go into the merits of those various ideas, but I think that at least we ought to be told what

is in the mind of the Government. We have been told practically nothing at all. Perhaps the Government have nothing in mind.
Then there is complete vagueness as to whether the Government propose to continue, to modify, or to extend the present arrangements whereby certain films receive more than the basic amount of levy. Possibly the Parliamentary Secretary is not even aware of this, as he is looking a little puzzled. He may or may not know that at present short films are paid at two-and-a-half times the normal rate. Discussions are going on in which it is suggested that not only should short films be paid at more than the normal rate, but second feature films should also be entitled to a larger proportion of the levy.
There is a good deal to be said for that, because second feature production has met very great difficulties in the last few years. There is much to be said for supporting British second feature production, if only because of the depths of inanity reached in so many of the American second features. In fact, my husband refuses to go to a cinema is he thinks that there is any danger of his having to see an American second feature.
Second features are also very important as a training ground for the younger producers, directors and actors. There is much to be said in principle for some extra support for second features—and possibly, also, for additional support for the short films, both of which, on present booking arrangements, have difficulties in getting an adequate return. But the Government should tell the House whether or not such arrangements are to be extended. We are really being asked to vote on something so vague that it is not fair to ask hon. Members to pass an opinion on a great deal of the Bill, so I hope that we shall have something very much more specific than that vague cultural homily from the President of the Board of Trade.
The other principal point in this part of the Bill is the levy, and its amount. In fairness to the right hon. Gentleman, I must say that he was quite frank about this. It was a guess, a compromise between, presumably, what the producers say they want and what the fund has hitherto produced. There is a considerable difference of opinion in the trade as to whether the actual amount of the levy


should be written into the Bill—that is to say, the floor and the ceiling; the £2 million and the £5 million as the minimum and maximum.
If, in the next ten years, we are to have the same degree of inflation as we have had in the last six years, then, of course, these figures may become entirely unrealistic, but the amount of the levy, of course, is important not only from the point of view of possible future inflation, but because the amount that any individual film producer may obtain from the levy depends on the number of British films that are made in any one period.
If, as we hope, the number of British films is increased, the amount that each individual film may collect from a fixed sum is pro rata diminished. This is, therefore, a very serious matter; and particularly serious if the number of what are called Anglo-American films is increased and they take a larger share of the pool. That being so, I am not sure that it is very wise to write into the Bill a ceiling of £5 million. It is at least debatable as to whether that figure should not be higher. On the other hand, there is something to be said for keeping at least some Parliamentary control over this business, so it is arguable that one should write something into the Bill. That is something upon which we should, again, have a chance to debate at length in Committee.
Another thing which concerns me very much in this part of the Bill is what happens if the Board of Trade estimates that a certain amount is to be produced by the levy and that amount is not reached. Under the voluntary system, of course, we have never yet come anywhere near to obtaining from the levy the amount which it was estimated to produce in any particular year. I do not know whether the Board of Trade may calculate it more effectively, but at least we should be told what happens if that Department says, "We estimate that in such-and-such a period, such-and-such a rate of levy will produce so much", and, in fact, it produces either more or, as has been the experience in the past, considerably less. We should be told what the Government have in mind in such circumstances. We have not had any indication so far.
Another vital matter is the amount of notice to be given to producers of the

amount of levy they may at least hope to obtain. As we all know, film producers require rather long notice. They generally say that they need at least 18 months' notice before they can go forward with their production plans with some assurance. Nothing I have so far seen in the Bill indicates what notice they may expect to receive.
They were told in the autumn that they might expect £3¾ million for the October 1957–58 period. Are we to take it that by next October the industry will be told what is to be the rate of levy for the October 1958–59 period? There is nothing in the Bill to give any such assurance, but perhaps we may be told what the Government intend. As the whole object of the exercise is to give assurance of stability to producers. that is one of the things which they ought to be told so that they may know, as far as possible, where they stand. On all these matters—and there are many others that my hon. Friends will raise—we need information before we can fairly be asked to give an opinion on Part I of the Bill.
I come to Part II, which deals with the National Film Finance Corporation. As I said earlier, we on this side are gratified to find that the Government are anxious to prolong the life of the Corporation. at any rate for a year or two, but, because of Clause 12, we are not quite certain how long they really want to keep it going. We are also gratified to know that the President of the Board of Trade has obtained satisfactory answers to the questions which he put to the Chairman of the Corporation. 1 may say that some of the satisfaction at those answers is due precisely to the setting up of the Film Finance Corporation by my right hon. Friend. The fact that extravagance in production has been cut down and that there is better and tighter accounting in many sections of the industry is directly due to the activities of the National Film Finance Corporation.
The whole point of setting up such a body was, of course, to foster the independent producers, and as far as possible to encourage some adventure, some experiment in film production; and to give a chance to the younger producers and directors who have not yet made their name. It would, therefore, be very unfortunate if the N.F.F.C. were too much


restricted in its activities. For that reason we are very much concerned with the way in which Clause 11 has been drafted, because it gives us the impression that there may be undue restriction on the activities of the Corporation.
It is true that it has lost money in certain directions in the past, but that is surely inherent in the job given to it. Here, I am not speaking of the peculiar case of British Lion. I do not know whether the President realises that in Clause 11 he is looking over his shoulder at British Lion but, in fact, that is what he is doing. That was a peculiar, once-for-all operation, and I do not think that we should judge the Finance Corporation on it.
It is also true that money was lost on Group 3 activities, but I think that Group 3 was very worth while and I was sorry that some restrictive action was taken there. The Government have said that they wish the Film Finance Corporation to continue. On the other hand, by Clause 12, they make the proviso that it can come to an end and be handed over to an unspecified private body. That seems to us to be very odd indeed. We shall need to spend a considerable time, at a later stage, looking at both Clauses 11 and 12 because, we on this side of the House are extremely suspicious of both of them.
It may be argued that there should be some extension of the powers of the Corporation, that it should even have its powers extended in the field of distribution or exhibition if it so wished; and there is a case to be argued on that because no one can pretend that there is not still a very strong monopoly element in the distribution and exhibition side of the industry. I would not dispute that this Bill might be an occasion for arguing that point.
In any case, we are extremely anxious that nothing should be done which would prevent the N.F.F.C. from doing what it was intended to do, which is to help the more adventurous production of British Films. The Government in this seem to me to be adopting the same sort of attitude as they have adopted with the Colonial Development Corporation, of trying to turn a public body into a conventional finance house, and that was not the intention when N.F.F.C. was set up.
I come to Part III of the Bill. As I have already said, I think that it really is scandalous that the Board of Trade has not arranged its business so that we could have discussed Part III as it ought to have been discussed; that is to say, giving us a chance of looking into the whole question of the possible amendment of the quota at this time instead of having to wait indefinitely to discuss it at some future period about which we have had no firm assurance whatsoever.
As the Bill stands, there is no need to have further legislation until 1968 and, knowing what the Parliamentary timetable is like, some of us are sceptical whether we shall have any further legislation before 1968.

Mr. Rankin: Not with a Tory Government. We must have a Labour Government.

Mrs. White: If we had a Labour Government we should do many things better.
We have a number of detailed criticisms to make of this Bill. We feel that we ought to have been given far more specific information and assurances on many of the points that I have raised and on many which will be raised by my hon. Friends. In general we give our support to it, but that support is, naturally, conditional on what happens in the forthcoming Budget. We are really being placed in the most extraordinary position of being asked to pass a Bill without any possibility of real assurance as to the financial basis which will make it viable.
I cannot for one moment pretend, and the President of the Board of Trade did not pretend, that this Bill could possibly stand without some adjustment of the Entertainments Duty. The whole business of the levy and of the duty has been inextricably interwoven from the very start. I have here the original Memorandum of Agreement of 29th June, 1950, and there it was put down quite specifically that the two things went together. So our welcome for this Bill is, as I say, conditional, but subject to what may be done in the Budget, and to its being adequate, we are glad to support the Bill. I hope that it will continue for the next ten years the policy of assisting the most valuable efforts of British film producers.

4.55 p.m.

Colonel Sir Leonard Ropner: Over a period of nearly thirty years now, a party appointment has brought to me very many pleasant contacts with the film industry. But when the affairs of the industry have been discussed in this House I have not previously been called upon to proclaim an interest; indeed, I have had none. My present association with the Rank Organisation, however, necessitates conformity with the recognised practice of proclaiming a personal interest, and that I do.
The Cinematograph Films Act, 1938, together with the Cinematograph Films Act, 1948, comprise what I think is generally known as the quota law. As the hon. Lady the Member for Flint, East (Mrs. White) remarked quite rightly, in the light of experience obvious defects have become apparent in the quota law. Consequently, the Government in another place have given a definite and specific pledge that the Board of Trade will consult with the film industry this autumn and that thereafter—and I think that the pledge given was as soon as possible thereafter—amending legislation would be introduced.
I make these preliminary remarks to illustrate the fact that this Bill, the Second Reading of which we are considering this afternoon, does not attempt to deal with many of the problems which confront the film industry. Nevertheless, it is an important Bill. It deals with many important points which will affect over a period of ten years the comparative well-being of this important industry. It is an important industry not only for the men and women who are employed in it, not only for the 3 million men, women and children who go to the cinema every day of the week, but it is nationally and internationally important. I am sure that there is an element of truth in a statement made some years ago that the United States was a third-class Power until the invention of the cinema.
The Bill, as the President of the Board of Trade has pointed out this afternoon, is primarily designed to help the film production section of the industry, and I can say at once that it is welcomed by film producers. As the President of the Board of Trade also pointed out, the Bill seeks to encourage in three ways the production

of British films. Firstly, under the provisions of Part I, producers will henceforth obtain financial support from the proceeds of a statutory levy; secondly, under Part II, the powers of the National Film Finance Corporation are extended for ten years; and, thirdly, under Part III, the film quota legislation is extended for a similar period.
I should like to make a few remarks about the three parts of the Bill, and, with the permission of the House, I will take thorn in the reverse order. At this stage I have very little to say about Part III of the Bill. I have already referred to the promise—and the hon. Lady the Member for Flint, East also referred to it—given by the Government in another place, that there willl be consultations with the industry and thereafter amendment of the 1948 Act. I think I should add that it is hoped that the amending legislation will not only be introduced but will become law before October, 1958, so that the new period may start after the existing unsatisfactory position has been rectified. That hope has been expressed by both producers and exhibitors, but, in due course, I think that my right hon. Friend the President of the Board of Trade may find somewhat divergent views expressed concerning what should be the exact definition of a British quota film.
I have even less to say about Part II of the Bill. This Part does not concern exhibitors. It is generally welcomed by the producers. Although it is welcomed by the producers, I think that the Producers' Association may have quite considerable amendments to suggest to it.
Now I come to Part I of the Bill. I feel sure that during the Committee stage the President of the Board of Trade will regard with sympathy all the Amendments which will be proffered with the object of improving its provisions. For instance, both producers and exhibitors attach great importance to direct representation on the British Film Fund Agency. That point also was referred to by the hon. Member for Flint, East. I suggest, with humility, to my right hon. Friend that during this and the further stages of the Bill he should remember that the industry can draw on an accumulated fund of experience gained in collecting and administering the Eady Levy. I feel


sure that my right hon. Friend will be well advised to be receptive of advice given to him from all parts of the House during the passage of the Bill.
In one respect the Bill gives rise to a little apprehension. I am sorry to have to keep referring to the words of the hon. Member for Flint, East, but she has already said a great deal of what I wanted to emphasise. The hon. Lady was right when she said that, to a large extent, this is an enabling Bill. Powers are to be taken to issue Regulations which will have the force of law, but they are not capable of amendment when they come before the House. I hope that my right hon. Friend will not prove averse to ensuring that there is adequate consultation with the appropriate sections of the film industry before the Regulations are issued.
As I have already said, the Bill is welcomed by film producers, somewhat naturally perhaps, as during this year no less than 20 per cent. of the film producers' revenue has come from the British Film Production Fund. It is not surprising, therefore, that producers welcome the change from a voluntary levy to a statutory fund. But what about the exhibitors? What do they think about it all, for their view is important? They will play an important part in the collection of this statutory fund. It is the exhibitor who must find the money. The cash must come from box office receipts; and not only cash, but more cash.
Last year the Eady Levy collected about £2½ million. During the first year the Agency must collect £3¾ million, that is £ 1¼ million more than the voluntary levy is likely to collect this year. In the following year the Agency will have the power to compel, or try to compel, exhibitors to pay an amount of no less than £5 million, or double the sum being collected today. The question arises, will exhibitors be able to find the cash? I suggest that the answer is "No," unless a substantial reduction is made in the Entertainments Duty.
The incidence of this duty, levied as it is on gross receipts, is at present far too high. Owing largely, but not entirely, to the burden of Entertainments Duty, no fewer than 200 cinemas in the country closed their doors during last year. Of

the total sum of about £40 million collected from all sources in the form of Entertainments Duty about £33 million was collected from the film industry. It is an astonishing fact—I am almost tempted to assert that it is a ridiculous fact—that of every £1 taken at the box office 6s. 5½d. goes in tax, and only 5½d. remains as the net return to the exhibitor. In the light of those figures I feel justified in repeating the question which I posed a few moments ago.

Mr. Harry Randall: Would the hon. and gallant Member mind repeating those figures?

Sir L. Ropner: Certainly. Of every £1 taken at the box office, 6s. 5½d. goes in the form of Entertainments Duty, and out of each £1, on the average, the net return to the exhibitor is 5½d.

Mr. Beswick: The hon. and gallant Gentleman means after all expenses have been paid?

Sir L. Ropner: Yes, the net return. I said the net return. I think that the general meaning of that is after expenses have been met.
I was saying that in the light of those figures I feel justified in repeating the question I asked a few moments ago—what do exhibitors think about this Bill? In the first place, they want more films than they are able to get at present. Exhibitors want more good films, and exhibitors in this country want more good British films. To achieve this exhibitors are willingly prepared to help British producers, provided that it can be said in all fairness that they are in a position to do so. They will not be in that position unless there is a substantial reduction in the Entertainments Duty.
I suggest that during this Second Reading debate the Chancellor of the Exchequer should on this occasion anticipate his Budget statement. The whole world—at least, everybody in this country—knows that there is going to be a reduction in Entertainments Duty.

Mr. Rankin: Is there?

Sir L. Ropner: I am absolutely certain that that is so. The President of the Board of Trade has to all intents and purposes said so this afternoon. Why not


give us, if not an accurate, at least a rough indication of by how much the duty is going to be reduced?
I think the hon. Lady the Member for Flint, East was perfectly right when she said that this debate and all subsequent debates on the Bill will have an air of unreality unless hon. Members know at the time when the discussion is taking place the extent to which the Entertainments Duty is going to be reduced.
The producer, as I have already proclaimed, will be pleased to receive the proceeds of this statutory levy. The least that the Government can do—and I suggest that they do it this afternoon is to tell the exhibitors by what amount they will be relieved of taxation so that they may be enabled to make the contribution which in the future the Government will compel them to make.

5.12 p.m.

Mr. Frank Beswick: Like the hon. and gallant Member for Barkston Ash (Sir L. Ropner), I, too, have an interest to declare in this industry, but it is not a commercial interest. It is simply that of an individual who likes to go to the cinema when he has a chance, and who has some conception of the potential value of the British film industry as a contributor not simply to the commercial standing of this country but to the development of taste and other values of our social life.
The other reason why I have tried to catch your eye, Mr. Deputy-Speaker, is that I believe that in my own constituency I probably have more men and women who make a living in the film industry than in any other constituency in the country.
There are one or two things which always strike me when I speak to those people in my constituency, and I speak now not so much of trade union organisers but of those whose job it is to work in the studios. First, they have an interest in the industry which is beyond that of the mere possibility of earning their bread and butter. Of course, they are interested in that, but in addition they have a very keen and lively interest in the contribution which their industry can make to the welfare of our country.
That interest is equalled, I think, by their uncertainty about the outlook in the industry. One thing which has bedeviled

them during the years has been the lack of a stable basis for the film industry, and I am sure we all hope that this Bill will go some way, when it becomes law, to giving all of them greater confidence in the future of their industry.
Another fact which has impressed me when I have had an opportunity of talking to those people is that they have absolutely no confidence in the present Government's handling of the industry's affairs. I am not saying whether that is justified or not; it happens to be true. That is the impression that I get when I discuss these matters with them. I am bound to say that had they been here this afternoon and heard the President of the Board of Trade introduce this Bill, they would not have had their confidence re-established.
The President of the Board of Trade appeared to be most certain of the contents of the next Budget statement. He seemed to me to be quite definite that there was going to be something of value in it. But there were occasions when he appeared to suggest that he was not absolutely certain what was going on inside the film industry or what, indeed, were the implications of this Bill.
My hon. Friend the Member for Flint, East (Mrs. White) covered almost the whole of the ground that we have to consider when dealing with this Bill, and we are all grateful to her for the very comprehensive review which she has made. I hope that later on we shall get some answers to some of the questions which she posed.
There are one or two other points that I should like to underline. I jotted them down, though not in the sequence in which they appear in the Bill. First, I was greatly struck, as apparently was my hon. Friend, by the fact that the President of the Board of Trade paid no heed at all to the fundamental problems and difficulties of this film industry. He paid no regard to the problems which are created by the near-monopoly character of some sections of the industry. In particular, the producers are up against the fact that their customers in this country are limited practically, to all intents and commercial purposes, to two buyers. It is this feature of the set-up of the industry which worries those engaged on the production side of films.
How can we break down the problem which is created by this near-monopoly? Many people feel that the National Film Finance Corporation's responsibilities can be so widened that through the medium of that organisation we can break down this monopoly. I was greatly concerned at the fact that not only did the President give no indication of the sort of encouragement that he was prepared to give to the Film Finance Corporation to expand its responsibilities, but that the references he made to it rather suggested that he will be very happy indeed when the time comes for it to wind up. He was very gracious in his earlier references to the work that has been done by the Corporation, but then he went on very hurriedly to refer to the provisions for the dissolution of the Corporation and rather gave the impression that it would be possible for the Corporation to do its work so well that it would work itself out of a job. I hope that when the Parliamentary Secretary replies, he will counteract the impression which the President gave, no doubt unwittingly.
A lot of people, I have no doubt, will pay a tribute to the work of the Corporation, but I think we ought to go further than that. We ought to say that it has a value in this field of its own account. It is not an emergency ambulance measure any longer. If it is successful in financing film making, then, as a finance organisation, as a finance house, it has a value even though it has been set up by Parliament and has not sprung up in a City of London as a result of the homilies given earlier by one of the City friends of the President of the Board of Trade. I think it was Mr. Solly Joel to whom the right hon. Gentleman referred.
We should like to know whether the Government will encourage the Corporation in going beyond the sphere of financing film production. With its present interest in or responsibility for the British Lion Corporation, it now has studio and distribution facilities. There is an organisation through which the Finance Corporation could develop useful and necessary services beyond its more limited responsibilities. Could the Parliamentary Secretary say a few words about this? Would the Government be pleased to see the Corporation developing this work of distributing films and providing

adequate studio facilities to film producers?
Further consideration must be given to the definition of British films for the purposes of quota and levy. The President skated over this problem rather quickly, and it would have been useful if he had discussed it a little. The one reference he made to it was to say that the levy was payable only for films made in the United Kingdom, but, of course, that is not in fact so. Indeed, it is very far from being the case. It is possible for a film to be made, but not in the United Kingdom, which does not employ any United Kingdom personnel at all, which could yet qualify for income from the fund. The hon. Member for Cheadle (Mr. Shepherd) seems to be surprised to hear this, but it is so in the case of a film made in any studio in British territory overseas.

Mr. William Shepherd: In that case, yes.

Mr. Beswick: But the President emphasised that it was the United Kingdom. There is a very important point here. There is a difference between the United Kingdom in this context and a Dominion or a Colonial Territory. I am at one with those who would like to see the Commonwealth and Colonial Territories developing in all things with a common practice, but there is not a common practice here. For example, the Colonial Territory in which such a film might be made has no obligation under the quota system; it has no obligation under the old Act, the Cinematograph Films Act. 1948, and it will have no obligation under the present Bill to show any percentage of British films. Nor, indeed, does any film shown in that territory make any contribution to the fund; there is no percentage received by the fund from the showing of such a film in Colonial Territories. Yet, if the film is made there, by that very fact the Colonial Territory is entitled to draw out from the fund, if. of course, it exhibits in the United Kingdom. The Parliamentary Secretary takes my point, I think. There is here something which could usefully be looked at again.
I should next like to mention the proportion,or type, one might say, of genuine British personnel who work in a film which is accepted as a British film for


these purposes. We may as well be frank about this. Far more frank things have been said about the United States in this House during recent weeks than I am going to say. I feel, therefore, that there is no reason why I should not say what is in my mind, and what I believe is in the minds of many other people, namely, that some of the United States productions shown on the cinema screens of this country do no good to anyone, neither to the reputation of the United States nor to the minds and morals of the British people who look at them.
What I wish to do is to keep out a lot of these American films. At the same time, we should encourage the production of really good and genuine British films to replace them. I really cannot understand the party opposite, which was prepared to ignore the United States and make a war in Suez, having as its battle-cry, "Independence of the United States", but which, when it comes to a really useful and constructive piece of work in the making of British films is afraid to say anything about the undoubted problem which is created by the size, influence and resources of the United States of America.
This is a challenge to us. We must face it. We must see to it that on our screens we have more good British films and less of this degrading trash which comes from studios in the United States. I make no apology for saying that. I am disappointed that the President of the Board of Trade, who made such an issue of British independence when it came to waging a war, has had nothing at all to say about the importance of British independence in this form of cultural activity. I hope that the Parliamentary Secretary will say something about the definition of British films. What are we thinking of? What do we really mean when we talk about a "British film" within the context of this Bill?
Some reference was made during the course of the President's speech to films shown on television. The President made a remark which I thought was a little strange; he said that the number of films made had advanced in recent years despite the challenge of television. The fact of the matter is that films shown on television and films shown on cinema screens are all films. They come from the same industry, they can be made by

the same people and processed by the same technicians. It is in Our interest to promote the production of British films for showing on the television screens equally as it is in our interest to promote the production of films for showing on the cinema screens.
I did venture to interrupt the President when he was making his most interesting observations about the development of taste in this country. I agree with him that, taking the last fifty or one hundred years, no matter how we regard the social life of this country, there has been an improvement in taste. I speak now as the father of children. I do not myself look at the television set, but I have children who do, and I am surprised at some of the stuff they tell me they have seen on the television screen. There was a most extraordinary example, referred to in the correspondence columns of The Times the other day, of a film shown in the children's programme about the death penalty, about hanging people. This sort of thing is wrong, and it is something which, if we have any belief in cultural values and the development of a proper standard of taste, we ought to take into account when encouraging the production of films.
Has the President of the Board of Trade considered the possibility of so amending the Bill that the producer of a good British television film would have a claim from either this fund or, if it is administratively to be preferred, a separate fund contributed to in some way by exhibitors on the television network? I believe that it would be possible, and I regard it as something into which we should inquire very closely.
Moreover, on this subject of taste and showing the British way of life on screens overseas, I am told that there is a very big unsatisfied demand from, for example, the television network in Australia for British films, and I learn today with some interest that, despite all that the Government have done in the Middle East, there is a demand even today from the television company in Bagdad for British television films. We have not, however, got the right type of British television film to send to them.
This is most important. It does not matter to me whether, in the development of films, the emphasis is on television rather than on the cinema in the


future; in either case it is important, and in either case it is going to be important in the formulation of the British character.

Mr. Swingler: Would my hon. Friend comment on this point? The actual flow of money into the fund which is available to be paid out to producers is based on a calculation of the attendances at cinemas. How could he apply that to television?

Mr. Beswick: It is an administrative point. If we accept the principle of what I am saying. I am sure that we can overcome the administrative problem. In fact, I suggested that it might be overcome by creating a separate fund to which exhibitors on the television screen might contribute and from which British producers might get a percentage.
The method of payment from the levy is bound up with what has just been said and on this point my hon. Friend the Member for Flint, East had some interesting observations to make and some relevant questions to put to the Parliamentary Secretary, to which I hope he will address himself. As my hon. Friend rightly said, payment to the producer is based upon box office takings. But of the complaints of producers is that it is possible to produce a first-rate British film which does not get a fair showing on the circuits because of the monopoly character of those circuits. I should like to see a method by which producers could be given some assurance that their production costs would be met if there was anything in the nature of a trade boycott against the exhibiting of their films by the big circuits.
I am aware of all the difficulties. Quite clearly, one cannot give any sort of guarantee to people who might produce only a poor film. It is, however, a problem to which we might devote attention. The Italians, I believe, considered the question and produced an organisation whose task it was to assess a film for quality. The Italian film thus received its subsidy based on a formula related to quality rather than to box office takings.
I recognise that it would be a difficult job for any body to be given the task of assessing the cultural merit of a film. Nevertheless, this is a problem which

ought to be considered and I am very sorry that the President did not recognise that the existing apparently simple method of payment from the levy produces anomalies, some of which, at any rate, we should try to eliminate.
I should like to say a final word about the levy. The President of the Board of Trade said it was essential that the industry should have something to go on. He meant that producers must know with reasonable certainty what they would get back from the fund. The right hon. Gentleman proceeded, however, to say that all this was a matter of guesswork and of argument, and I agree with him. Under the system envisaged by the Bill in its present form, the producer has nothing whatever to go on as far as budgeting ahead is concerned. I am not at all certain that it would not be better for the Government to set aside a definite sum of money from entertainment tax receipts for the film producers, instead of starting at the beginning of the year with some kind of percentage which we can only guess will result in a certain sum of money at the end of the year.
Like my hon. Friend, I welcome the Bill, with all its faults. I only hope that as a result of Amendments it will be an improved Bill at the end of our deliberations, and since so much of its importance will depend upon the regulations, I hope that the Parliamentary Secretary will be able to assure us that they will be brought before the House before they are given the force of law.

5.35 p.m.

Mr. Arthur Tiley: I am glad to follow the hon. Member for Uxbridge (Mr. Beswick), and I shall declare the same interest in the debate that he has. The big-wigs have spoken at the Dispatch Boxes, the giant from Rank's has thundered and departed, and now we get an ordinary cinema-goer entering the debate. I hope that the House does not feel that we are in the double-feature class.
I was utterly devastated by the first few words of my right hon. Friend the President of the Board of Trade in introducing the Bill. A week or two ago, when I read the Bill for the first time, strangely enough I understood it. I felt that, after eighteen months in this House, at last I was learning to understand these


Bills which are brought before us. To my horror, however, my right hon. Friend began his speech by saying that the Bill had been specially drafted in simple form. Apparently I have, after all, made no progress whatever.
After sitting for many weeks in Committee on the Rent Bill, it is a very nice feeling to sit in the House today during the Second Reading of a Bill to which both sides are bidding welcome. The Opposition will bemoan the fact that there is no Clause 9 in the Bill to win any of the outstanding by-elections. Indeed, in comparison with the Rent Bill, Clause 9 of this Bill is a poor and tawdry thing.
Both sides of the House welcome the Bill, because it will give stability and not merely promises. That is why the trade and industry are behind the Government and are not opposed to them and not losing confidence in them, as the hon. Member for Uxbridge suggested. I will not follow the hon. Member into his peregrinations on Suez, neither will I share in his crashing attack on the culture of our great allies in America. In the remarks made by the hon. Member, I found nothing that would be helpful in our friendship with America.
We welcome the Bill because it produces and gives stability to the future of this important industry. It is an industry of great variety of employment; I doubt whether any other of our industries contains such a variety of jobs. It is entertaining and educational, and it lends itself adequately to the portrayal overseas of the British way of life.
No one can doubt the need for the levy. We pay tribute to the work of the Opposition, who, when in office, introduced the voluntary levy, because it has created a healthy industry. We are producing better films, and the day has gone when people automatically went to the cinema on certain nights of the week.
It is rather strange that we in this House, in the quiet of the debate, should be dealing with this glamorous and world propaganda machine which is the film industry, especially as hon. Members, on both sides, are amongst the least frequent cinema attendees in the whole population. None of us ever has the time when in London to visit the cinema, and when we are in our constituencies we are so busy dealing with political

problems that the recreation of this wonderful scientific entertainer and means of education is denied us. Of course, it is very proper that in the cool and calm of this debate we are assisted in giving a sane judgment on the Bill.
Because of competition and by the help of the voluntary levy, we have improved and are improving British films which have been and are being made, and that is a very good thing. Competition comes, too, from our increased educational facilities. Because of those increased educational facilities, which my right hon. Friend was so right to enunciate, through the spread of our educational system, children are being taught to lead fuller lives, and consequently the habit of going to the cinema automatically will die in the future. Therefore, there is need for this permanent buttress to stabilise the production of films.
Moreover, since the voluntary levy was introduced, more British films have been sent abroad. I hope the President will make sure that the collection and administration of this compulsory levy will not swallow too much of the income. We have already paid tribute to the work which has been done on an economic basis while the levy was voluntary. There is need for economy in the administration of the fund and of the Agency.
It was so refreshing, but frightening at the same time, to read the first lines of Clause 1 of the Bill, which say:
…there shall be established, in accordance with the provisions of this Act, a body corporate to be called the British Film Fund Agency…
It is a refreshing change from the boards. We have created boards for so many things, and boards are boards, but boards by any other name are just as dangerous unless a watchful eye is kept on their economy.
I wonder where the first sod is now being cut for the new building which will become the Agency' headquarters. I wonder how many staff there will be, how many cars, and how many trips abroad will be undertaken to inspect foreign film actresses. We shall unquestionably have staff and cars and pensions schemes and expenses.
There are to be three media to deal with the administration. There will be


the Board of Trade, which has its part, and the Customs and Excise with its part, and there will be the new British Film Fund Agency to do its part. I hope—and I am being very serious about this—that the most watchful eye will be kept on this administrative machine, because now, when labour is such a scarce commodity, one wonders, with the creation of all these boards and so on, who, for instance, will drive the train and who will make the cloth.
Some of my correspondents in their letters infer that the levy is not Tory policy. I cannot see why. Who pays? Now I have the reply to the hon. Member for Newcastle-under-Lyme (Mr. Swingler), who called for a subsidy. Who pays? Not the Government. but the customer at the paybox; you, Sir, and I and all of us. We are all denying ourselves a little, making ourselves a little poorer, to provide the money which will be necessary to ensure full employment and a healthy industry to meet competition from abroad.

Mr. Swingler: I agree that the voluntary levy was not in the nature of a subsidy, but now the levy is to become a tax, and I cannot see any difference between the new statutory levy and Entertainments Duty. Indeed, there is no difference. It is still a tax for the purpose of sending money to the film producers. I do not see the difference between that and a straightforward subsidy found out of taxation.

Mr. Tiley: The main difference is, of course, that if it were a tax and a subsidy it would be merely a transfer of money by the Chancellor of the Exchequer. This levy is to be money which comes out of the hon. Member's pocket and mine at the paybox. All of us contribute. Moreover, we shall contribute according to the price we are prepared to pay for a seat. Like the hon. Lady the Member for Flint, East (Mrs. White), I have had many happy times in the ninepennies. I should have liked to have followed the hon. Lady today. It was such an attractive change from the ordinary course of Out debates to see the hon. Lady taking part in debate on this glamorous subject and being so technically perfect. Her speech was enjoyed by us all. It would have been a pleasure to have followed her to the pictures.
The reason for the Bill is not far to seek. It is our crippling taxation system.

What a complicated economy we are building. The Government take £33 million from the exhibitors alone, and then we go to all this fuss and have to have three media, including one new one, to collect and to pay out money for an industry which needs from £3 million to £5 million to be kept in it—for what? For production.
It is a repetition of the same mistake made at present throughout the whole of our industrial economy, the mistake by which so much money is drawn by taxation out of industry as to kill the incentives to production within industry itself; so much so that industry—certainly this industry—can no longer fight its own battles, and the Bill is evidence of that.
I hope that when the Bill is in Committee—and all Bills are improved in Committee—we shall be able to ensure that we are fair to all those engaged in this industry. It was inferred in debate upon the Bill in another place that there were two units, two sides, and that we could not legislate to make one side pay money to another. That is not so. We are dealing with one major and large industry with three separate units and I hope that we shall be able to make the Bill a little fairer to all the three units.
For instance, Clause 2 provides for certain exemptions to be made. I was very glad to hear from my right hon. Friend that small cinemas which cannot possibly pay this levy will be exempted. There is another matter which arises from Clause 2 and which ought to be considered farther. Due to the actions of the combines, some of the films, for which all the cinemas will be contributing part of the levy, are not easily available to the independent exhibitors, the small men. I can see nothing in the Bill which would prevent a scaling of the levy through regulations to take into account the fact that the smaller, independent exhibitors are not in the same position as are the larger combines to obtain main issues of the best films.
We ought to look again at television. It will be a great pity if many of the smaller cinemas are to have to pay this levy to help the production of films which are shown on television, which obviously will keep people away from their own cinemas. Before the debate started I went to the Library and glanced through the Radio Times and I.T.V. News to see how


many films are being shown this week on I.T.V. and the B.B.C. Television Service. I had not time to analyse the films, but I discovered that there are no fewer than 25 films to be shown this week on television. It is a tremendous number. We are not going to the cinema two and a half times a week. If we look in at our television sets we go 25 times a week. Some method ought to be found to make television pay its proportion of the cost of this great work of providing films. I am sure it is not beyond the bounds of possibility.

Mr. A. E. Hunter: The hon. Member should bear in mind that the B.B.C. and I.T.V. pay for the films they show. The film companies do not let them have them for nothing.

Mr. Tiley: Yes, I know. The hon. Member is very kind to be so helpful, but not so kind to think me so dull that I do not know that. I must be making a speech betraying bottomless ignorance if he felt it was necessary to make that intervention. Of course, cinemas pay for the films, too. They rent them. Perhaps the hon. Gentleman did not know that? In addition to renting the films, they are to pay this levy.
Another thing which strikes me about the Bill is that all the inspections and all the restrictions seem to be directed at the exhibitors. All the supervisions and the penalties are aimed at exhibitors only. Why cannot we in some way even out the burden of responsibility for making this Measure succeed? The producers are not even told to produce films, and we know from some of their past extravagance in production that they need to be supervised in some way. It was very encouraging to hear my right hon. Friend say what he did about the Budget and the influence that it may have on the Entertainments Duty. I think that he only said "may".
All of us, on both sides of the House, are upset by the plight of the small cinemas. We are told that about a couple of hundred will close in this twelve months. We know also that those that remain are shabby and need essential repairs for the comfort of their patrons. Those who engender enthusiasm for the maintenance of the live theatre in the West End ought to go to the provinces. One never hears the West End theatre mentioned in my city. Our people never

see it. The only time that the city sees Olivier is when they see his name advertising a certain cigarette.
The giants of the West End theatre have only themselves to blame if we in the provinces protect or try to protect our cinemas in our villages rather than the West End theatre, because out in the wilds and in the suburbs we can reach for the stars with Bader, climb Everest with Hillary and Tensing, discover the South Pole with Scott and win the Battle of the River Plate with Harwood. These are all things which are denied to the provinces by the West End theatre.
When the Bill was read a Second time in another place, a noble Lord mentioned a hoarding in the centre of London which portrayed a very beautiful woman. He said that it was coarse and obscene. She is a lovely creature. We must cater, I know, for all tastes. One man's meat is another's poison. Some collect antiques and some collect pin-up girls. I would prefer to see Anita on a hoarding than an advertisement for inner cleanliness—for "a thing of beauty is a joy for ever".
Our life will be poorer if the action which we hope will be taken in the Budget in connection with the Entertainments Duty is not taken. Our life would be poorer and less colourful without all these cinemas in the provinces. As I have said already, it is fine to join in welcoming the Bill, away from all the bitterness of party strife. I hope that the House will give it a willing Second Reading and that we shall improve the Bill in Committee.

5.55 p.m.

Mr. John Rankin: I hope that the President of the Board of Trade realises by now that he put the House in considerable difficulty this afternoon when he stated that the Chancellor will take note of the statutory levy. He went a little further, and told us that the way in which the Chancellor was bound to take note of the levy was by reducing the incident of Entertainments Duty. The right hon. Gentleman raised some queries in our minds when he gave a promise that there would be a reduction in tax. Did he mean that the reduction would compensate for the increased amount which was coming from the statutory levy, or did he mean that the decrease in tax would be more in accord


with the amount that was presently being asked for by the exhibitors?
As we are being asked to give a Second Reading to a Bill the future of which, on the operational side, depends very largely indeed on what will be done about the Entertainments Duty, we hope for a little further elucidation of what the President of the Board of Trade said today before we part from the Bill. The right hon. Gentleman posed the question to the House, "Do we believe in the future of British films?" I think that on both sides of the House the answer would be an unqualified "Yes." If we consider the actors and actresses, born and trained in Britain, such as Stewart Granger, Jean Simmons, Audrey Hepburn, and Charles Laughton, and a whole host of other star artistes in Hollywood productions and other young actors and actresses at home, we see that we have the material among the men and women in the profession. When we look at films like "Sinbad," "The Cruel Sea" and "Richard III" we must realise that the work of our film-makers is second to none in the world.
We have the men and women, therefore, and we are producing the goods. Where does the handicap lie? It lies in the fact that in America, with a circuit of 20,000 cinemas and a weekly attendance of 70 million people, £10 million is taken away in the form of tax from the cinema industry, whereas in this country, with 4,500 cinemas and a weekly admission of about 20 million people, £33 million are taken from the industry every year by the Government. That is the real handicap to the progressive evolution of our cinema industry. Compared with America, our industry is most unfairly treated by the Government, who take from it more than three times the amount of tax that is taken from the industry in America and levy that tax on a cinema audience that is only one-third the size of the audience in America. From that point of view, I hope the Parliamentary Secretary will be able to add a little more to what the President gave us on the question of general cinema taxation.
The President is pleased with the amount that we are earning from the showing of our films in America, and so are we all, but I should like to know

which circuits are showing our films. When we debated the cinema industry on a Motion of mine a year ago, my information was that British films were being banned by American circuits, and that was not then disputed. Now the President tells us that we are doing not so badly. Where? Is it in the small specialised theatres? Is it on the American television circuits? We know that "Richard III" had a lucrative booking there. Is that where we are earning the £1 million? I imagine that that is the source. If that is so, it should be made clear by the Government that the £1 million to which the President referred is being earned not in the American cinema circuits but in the specialised art theatres and on American television.
I support the view which has been expressed by some of my hon. Friends about the National Film Finance Corporation. I deplore the happy sort of way in which the President of the Board of Trade seems to look forward to the demise at some future date of the Corporation. I am sure that he will meet very strong resistance from this side of the House, and, judging by some of the speeches made by hon. Members opposite, I imagine that we can hope for support from there for the retention of the Corporation. I want the powers of the Corporation not to be restricted or abolished, but to be expanded, because I feel that there is a great opportunity in this country for the creation of another circuit under public ownership which will act as a stimulus to the two great circuits, Rank and Associated British Cinemas, which now exist.
When the President referred to the need for the film industry to be on the side of revolutions in taste and culture, I sought to intervene to put a point to him. Not only is there an improvement in taste and culture, not only are public standards rising—we should encourage that—but the technique of film showing is changing. I wanted to ask the President whether he will lend the weight of his authority to the revolution which is now taking place. Will he do what he can to assist the introduction of Cinemascope and Cinerama? People are demanding these things, just as they are demanding a high level of film entertainment.
However, the introduction of Cinema-scope into a cinema demands a capital


outlay of £5,000 or £6,000, and thus it is ruled out for many of the types of cinema which have been mentioned. The Cinerama installation in a cinema means a capital outlay of £62,000.

Mr. H. Lever: Thank goodness. I wish it were more.

Mr. Rankin: I completely disagree with my hon. Friend, and so do the general public. One London cinema which introduced Cinerama found there was a great response which indicated that the public wanted it. Not many cinemas can afford a capital outlay of £62,000 to introduce such a system, but the Government can help cinemas to develop, not merely along the lines that the President indicated but along the lines of having better and more up to date techniques, by taking less in taxation from the industry.
As has been said, the Bill is a peculiar mixture. Clause 1 is so simple that it does very little, and that is probably why some hon. Members have found it so easy to understand. It does nothing, in fact, and we have to wait for a Statutory Instrument before it can operate. Clause 2 also depends upon the operation of a Statutory Instrument. Clause 3 becomes alive only when a Statutory Instrument comes into effect. Also, it is tied up with Clause 8 so that Clause 8 seems to be indirectly dependent on the Statutory Instrument. Clause 12 will begin to operate only when the Government introduce Regulations which bestow the required power. Consequently, a quarter of the Bill deals with matters which are subject to Regulations, the terms of which we do not know and which we must accept or reject as a whole when they come before us.
I want briefly to examine the way in which the Entertainments Duty and the voluntary levy came to be married. Whether or not it has been a happy marriage is a matter for debate. The voluntary levy was introduced on 16th June, 1950, and as a result of that the Entertainments Duty was reduced by ½d. on all seats up to 1s. 6d. at a cost to the Treasury of £1,650,000 in a full year.
Prices of the 1s. 9d., the 2s. 3d. and the 2s. 9d. seats were raised by 1d. in each case and Entertainments Duty increased at the same time by ½d. on each

of those prices. From that increase the Treasury gained £1,350,000. So, as a result of both proposals, the Treasury lost £300,000 in a full year and it was anticipated that in a full year the exhibitors would benefit to the extent of £3 million. Out of the ½d. that exhibitors gained, ¾d. per seat sold, at prices exceeding 3d., had to go to the British Film Production Fund. So from the beginning the tax and the levy were allied.
A week later, Sir Wilfred Eady confirmed that view when he told an exhibitors' delegation that "levy and tax were the shape of things to come". It was clear from that that unless the levy was accepted, there would be no tax concession. Speaking in the House at that time, my right hon. Friend the Member for Huyton (Mr. H. Wilson) paid tribute to the attitude of the exhibitors in these words:
…I am certain that what they are doing to help the British film production of this country will, in the long term, redound to their own benefit as well as to that of film production."—[OFFICIAL REPORT, 29th June, 1950: Vol. 476, c. 2500.]
I ask the Minister tonight whether he accepts that view, stated when the voluntary levy came into operation. If he does not, will he say so?
What are the bare facts of the situation today? What was the reward of the exhibiting side for its attitude which was so highly commended? During 1956, 225 cinemas were closed and now the A.B.C. circuit is threatening to close some of its cinemas, I believe 30, and the Rank Organisation is also doing the same. If the big circuits cannot keep their halls open, what chance has the small independent exhibitor? Is this the reward that the cinema industry is getting for its devotion to the public interest which far transcended any considerations of finance or short-term views?
What is to be done to help the exhibiting side and, therefore, the producing side? It is said by some that we are seeking not merely to help exhibitors and producers, but to save them. My first suggestion is that the levy should be paid out of what is taken in Entertainments Duty. The Government are already taking enough from the industry. Let the Government collect the Entertainments Duty and then pay the producer out of that tax the amount which will be collected by the statutory levy.
The Minister says that that is a subsidy and that we cannot have a subsidy for this industry. In another place we were told that the public would give an old-fashioned look at a subsidy for film production, but, of course, the public pays a subsidy, because every time a person occupies a 1s. 6d. seat, he pays ½d. of his admission price to the producer. If there would be an old-fashioned look if a subsidy, as the Minister calls it, were given to film producers, then my view, substantiated by that of a noble Lord in another place, is that it is completely wrong to force one trade by law to pay a tax to another; and that is what we are now doing. The Minister will remember that the acceptance of the voluntary levy was conditional on the promise given by Sir William Eady to the exhibitors that levy and tax would go together. That was the shape of things to come.
My alternative suggestion is one with which the Minister is perhaps familiar. It is that on all seats there should be 1s. free of tax, the balance being divided, so that 33⅓ per cent. is payable as tax and levy, which, according to the promise given in 1950, go together. That would mean that 66⅔ would go to the industry. Thus, if a person paid 1s. 9d. for admission, 1s. would be free of tax, 3d. would go for tax and levy, and 6d. would go to the industry. The 3d. could be apportioned much as it is now, 2¼d. going to the Chancellor, and ¾d. going to the Eady fund.
If the Government agreed to that, they would do three things. They would, first, honour the promise made by Sir Wilfred Eady on behalf of the Government of the day, that the levy and tax would go together; secondly, they would avoid the mention of subsidy and the possible infringement of G.A.T.T., which I believe is one of the drawbacks to paying the levy out of the Entertainments Duty; and, thirdly, they would give an enormous boost to the small exhibitor and to the cinema industry generally.
I am sure that the Minister already realises that it is quite clear that the exhibiting side cannot provide more than it now provides for the Eady fund, because attendances are diminishing, and yet that is what is being asked of it. If by law it is to be forced to do that,

then there must be a considerable reduction in Entertainments Duty, or a collapse in an industry of high social and cultural value and with an important use as a means of communication between Government and people.
I know that hon. Members in all parts of the House want to speak in the debate, and I do not want to say any more at the moment. Later, we shall have an opportunity in Committee to talk about the quota, about which I should have liked to say something, and about the Anglo-American film agreement, to which reference has been made and which calls for amendment to help the production of British films. The quality of some American films has been referred to, and there is no doubt that through the Anglo-American agreement we could control the kind of films which come in from America. If we did that it would give an impetus to our efforts to help the production of better quality British films. I hope that we shall have a chance of developing some of these points in Committee.
I agree generally with the purposes of the Bill, and trust that it will help both the production and exhibiting side of the industry. I am certain, however, that if that end is to be achieved considerable alterations will require to be made in Committee. I hope that the Minister is observing that that has been said by hon. Members not only on this side of the House but also on his, and that, as a result of this part of the consideration of the Bill, he will attune his mind to the thought that if the Bill is to be as helpful to the industry generally as I am sure he wants it to be Amendments will have to be made. I hope that he will co-operate in this endeavour in Committee.

6.21 p.m.

Mr. John Howard: Enough has already been said to show that the production side of the film industry needs support. The Bill is founded upon that assumption; indeed, it is quite apparent that British films could not be produced unless means were available of financing them. The exhibiting side obviously needs the product to fill its screens, and if it is not assured of a supply of British films it will have considerable difficulty in putting on a programme for each week of the


year. It is also important from the national viewpoint to ensure that British films are shown throughout the world so that the rest of the world may have an opportunity of seeing the British way of life and of appreciating our outlook.
The Bill is realistic in that it recognises that without financial aid we shall have to wave goodbye to the British film production industry. Having recognised that fact, we must obviously find ways and means of supporting the industry satisfactorily. Very wisely my right hon. Friend has decided to continue with three tested and proved props upon which film production rests at the moment. Each of these props has a part of the Bill devoted to an exposition of its rôle.
The first prop is the film levy, which is taken from the exihibitor and paid to the producer. The second prop is the finance over and above the levy—that which is necessary before a film can be begun. That is provided by the National Film Finance Corporation. Thirdly, we have the quota system, which ensures that there is a place for British films on our screens. I believe that many exhibitors have difficulty in meeting their quota requirements and are excused from doing so because of the insufficient supply of British films.
Although the Bill may be thought to be concerned primarily with the film producer, who is on the receiving end, it is also of very considerable concern to the exhibitor, on the paying end. In the past, the exhibitor has recognised the importance of sustaining the production side of the industry by accepting a voluntary levy, about which the hon. Member for Govan (Mr. Rankin) spoke at some length. The exhibitor also recognised that it was necessary to translate the voluntary levy into a statutory levy and, as we will see from the Bill, the period envisaged for this levy is ten years.
The cinema proprietor is the man who projects the glamour from the film studios—about which my hon. Friend the Member for Bradford, West (Mr. Tiley) spoke in his amusing contribution to the debate—and, at the same time, collects from the general public the price of admission, which includes the levy. Since the exhibitor has to provide the means of keeping the production end of the industry alive it is very important that we should bear in mind his ability to pay. My right hon. Friend the President of the Board of

Trade referred to the chicken and the egg. The exhibitor has been called the goose which laid the golden egg.
In fact, it is true to say that the exihibitor lays four eggs. His first egg contains Entertainments Duty; his second, the film levy; his third, film hire, which goes to the distributor and producer; and, finally—a very small egg—there is a little profit for himself. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) is no longer in his place, but I noticed that when he referred to a profit of 5½d. accruing to the exhibitor from each £1 paid at the box office he omitted to add that not only the profit but also depreciation and rent has to be met out of that very small sum.
Not all these geese are continuing to lay their eggs. The exertion of laying the first three has been too much for about 179 geese in the past year, these being represented by cinemas which have closed. The problem of closures is a serious one. With each closure the cinema concerned provides no further eggs for the Chancellor in the shape of Entertainments Duty; the producer loses his film levy, and he and the distributor together lose their share of the film hire.
It has been said that the closure of certain cinemas will allow the remaining cinemas to build up their attendances, the theory being that the patrons of the closed cinemas will move either into the centre of towns or across the street to the cinemas which remain in operation. I have been told reliably by the trade itself, that that is not so. The patrons of the closed cinemas tend to stay at home and watch television, or reserve their visits to the cinema for particularly good films, when they feel that it is worth while making a short journey to see them.
There is one further point that I should like to make about closures, since it is important to avoid jumping to the conclusion that they are all the result of the burden of Entertainments Duty. The shortage of product is a factor. If there are not sufficient good films to go round, the cinema which is missed out when the better feature films are distributed has less chance of remaining in business, because it cannot attract the patrons. At the same time, the influence of television on closures is a most important factor. Together, these factors have been too much for those cinemas which, hitherto,


have been existing on a precariously small margin, and they have been forced to go out of business. They are a reminder to most of us in our constituencies of a former exhibitor who is no longer serving the public.
I hope that I have said sufficient on this point to prove that the ability to pay exists, but only if the size of one of the "eggs", the Entertainments Duty, is reduced. Many hon. Members are indebted to the All-Industry Tax Committee of the film trade which has produced a report showing convincingly the present financial position of the industry. From that report I see that 25 per cent. of the cinemas still open are operating at a loss, and that is an indication of the shape of things to come. Those exhibitors are hanging on, presumably in the hope that circumstances will change and enable them to get out of the "red" and earn a little profit.
Having dealt with the ability to pay on the part of the exhibitors, we must examine the reliance which the producer places on the receipts from the film levy. We have accepted today as a fact that the film production industry must be kept in being but so far, no figures have been quoted to demonstrate that point. We must bear in mind that the British market is only about 15 per cent. of the world market and, therefore, a British film which has a limited appeal, possibly only to the British public, has considerable difficulty in covering its cost.
Going back to the All-Industry Tax Committee's report, I will quote from a sample taken of 159 films which were completed and distributed over a period of two-and-a-quarter years ending on 30th June, 1956. Incidentally, they are all feature films. The 75 per cent. sample reveals a loss of about £4¾ million during that time. The time factor is important. There was a loss of £4¾ million in two-and-a-quarter years. The annual equivalent with which we are concerned when looking at the level of the film levy is £2,800,000. The average receipts, or estimated receipts from the levy, would be £2,200,000 and, therefore, the loss on feature films taken as a whole for one year is about £600,000.
As we have been reminded this afternoon, feature films are not the whole story. There are also short films. They

receive support from the distribution of films levy, but notwithstanding this, they too show a deficiency. Adding the results of the short films to the feature films, it is seen that the annual loss is about £3,350,000. The levy, so far, contributes, or is estimated to contribute, £2,600,000, leaving an overall loss of £750,000. It is fair to say that on the basis of this report £3,350,000 would be required to enable the industry to continue without profit and to maintain the present rate of production. This, I think, squares up fairly well with the figure of £3¾ million as the level of the levy for the first year in which it is to operate.
The report goes on to refer to a return of 25 per cent. as profit to the producer and, therefore, makes an overall demand for something over £5 million. Although I have quoted liberally from the report, I cannot follow it that far; because I feel that an industry which has to rely on the exhibitor or retailer for support can hardly expect, when receiving an allowance from the retailer, to increase that allowance to a figure which would permit the producer to make a fairly substantial profit.
A good deal has been said today about the limits placed on the levy, the lower limit of £2 million and the upper limit of £5 million. There are various points to be borne in mind in this connection. As has been said frequently, the Bill is government by regulation. I hope that we shall hear today whether the general pattern, established during the years, when the voluntary levy has been in existence, for the collection of the levy and its subsequent disposal to the producers, will still be followed, or whether the President of the Board of Trade intends to introduce any innovation. Since so much is dealt with by regulation, it seems odd to me that these two limits are included in the Bill. I should have thought it a simple matter to introduce a figure, either annually or for a period, by regulation.
The higher figure of £5 million may easily be too low. If film production goes up enormously, and a large number of films are produced, the limit of £5 million might well mean that each producer would receive insufficient to enable him to cover his expenses. On the other hand, the £2 million figure may be too high. If production contracts, so that


there are relatively only a few films produced, obviously, when the £2 million is shared out, each producer may receive a sum considerably in excess of the amount he needs to balance his production account.
There is a further tempting possibility in saying that the lower limit of £2 million is too high. We have discussed the Entertainments Duty during this debate. If do not want to draw any conclusions, but it is a fact that if the duty should be abolished altogether, the film hire, which at present is 4s. 7½d. in each £1 taken at the box office, would rise to 6s. 8d. in every £1. Therefore, the distributor, the renter and the producer would together receive another 2s. from each £1 paid over at the box office. Using, again, the figures quoted in the report, and an overall gross take of over £100 million at the box office, the producer and distributor would be able to reach a maximum additional income of £10 million.
I do not propose to refer to the remaining parts of the Bill, but I wish to say something about the National Film Finance Corporation, since it has been under fire today. In its early stages the film industry had a very unhappy and chequered career and found it impossible to raise finance through the normal channels. In consequence, this finance agency was set up to provide the money. The industry has progressed quite a long way since then. Reference has been made to its greater sense of accountability and to budgetary control, all designed to eliminate the loose budgeting which led to very serious losses in the years before the levy and the Film Finance Corporation came into existence.
The point of time has now been reached—this is acknowledged in the Bill—when the Film Finance Corporation should not be encouraged to lend money to those in the film industry who are unable to find finance elsewhere but to lend—and this is provided in the Bill—to those who are able to deal with films which are commercially successful; in other words, it should advance money only to those with a reasonable record, or to those who are putting up a commercially feasible proposition. In the National Film Finance Corporation we are dealing with public funds. I believe

that there is a floating debt of about £6 million, so there is obviously an obligation to take care.
Hon. Gentlemen opposite have spoken of the possible not liquidation but transfer of the National Film Finance Corporation to other hands. I cannot share their alarm, because the industry, if it goes ahead, will be geared to the levy. There will be a production programme and, with assured finances which will be geared to the programme, we obviously must come to the point where the National Film Finance Corporation may no longer serve a useful purpose and finance will be available through the usual channels.
Perhaps I detected in the alarm expressed at the possible demise of the Corporation an anxiety to nationalise part of the film industry. We heard this afternoon about the difficulties of the distribution, and the suggestion was made that it might be necessary to use the Corporation not only as a finance house but as a film renter and distributor. It is possible that the reason for the alarm is that the Bill may put out of reach a tempting vehicle for nationalisation within the industry.
On the quota side, in Part III, a good deal has been said, notably on the definition of British films and, therefore, I shall not press the point any further. The Bill, by and large, enables the production side of the industry to plan ahead and, with the rest of the trade it has shown considerable ability in presenting its case by means of a thorough investigation into the finances of the industry. I hope that we shall see, once the film levy has been put on a statutory basis, that the trade will conduct a further examination to see whether it can overhaul the production side of the industry further, whether the stars and directors can operate on a profit-sharing basis more generally than is done now, and whether the industry can get together with the trade unions to see whether there are not a number of restrictive practices which add to the cost of films and which can usefully be eliminated.
One further and personal point relates to the Clause dealing with the audit of the British Film Producers' Agency. I am much obliged to my right hon. Friend anti to the Board of Trade for introducing a Clause which deals with the audit and


bringing the conditions for the appointment of auditors into line with those existing in other Acts of Parliament, and, in particular, adopting the qualifications that are contained in the Companies Act. In making that statement, Mr. Speaker, I must declare an interest. As a member of the Institute of Chartered Accountants, I am, naturally, pleased to see that this practice has been creeping into many Acts of Parliament, and has been followed here.
That concludes my remarks on the Bill which I support because I think it is good in that it gives statutory effect to a very effective voluntary arrangement. I am sure that the House will give the Bill a Second Reading.

6.45 p.m.

Mr. Stephen Swingler: The Bill has been generally welcomed because hon. Members are thankful for small mercies. I feel bound to sound a somewhat discordant note as loudly as I can.
I believe strongly that the form of the Bill shows the validity of the demand for an independent inquiry into the industry which some of us made on 10th February, 1956. This would have been a better Bill, and some trouble that is likely to occur would have been avoided, if such an inquiry had been carried out.
We asked for a general and public inquiry into the state of the film industry and the cinema trade, but the Government chose, instead, to have a secret investigation. I know that the present President of the Board of Trade has no responsibility for that matter at all, but the Government were entirely wrong. The right hon. Gentleman's predecessor chose to make the National Film Finance Corporation a vehicle for confidential inquiries within the trade about its views on the future of legislation on the film industry.
An extremely interesting questionnaire was circulated by the N.F.F.C. last year to all sections of the industry and trade. Some sections, including the trade unions, produced a document, and published their views and recommendations. Other sections did not. The main point was that the right hon. Gentleman's predecessor refused to publish the report of the National Film Finance Corporation on

the views of the trade and its recommendations to him about future legislation.
That was a grave error on the part of the Board of Trade. This debate would have been more informative, to say the least, if that report had been published. I still see no reason why it should not be published. We are now confronted with a Bill in which the quota system is reproduced unamended, the powers of the N.F.F.C. are reproduced unamended—with one exception—and the levy is made statutory. We are in very great danger of falling into the complacent acceptance of a number of expedients which have grown up haphazardly in the film industry over twenty or thirty years. It is high time that some of the assumptions on which these expedients have been based were questioned, and they cannot be adequately questioned without an independent commission of inquiry into the matter.
I believe that the basic point is this. Here we are, in 1957, after a long period of experience of many of these expedients, and still over 70 per cent. of the films shown at our cinemas are foreign films. I wonder what would be said if over 70 per cent. of the newspapers of this country were foreign newspapers, or if over 70 per cent. of our radio material was of foreign origin, or if over 70 per cent. of the creations in our theatres were of foreign origin?
I am in no way a zenophobe. I believe that the British public is entitled to all the best productions from all the countries of the world. Of course, we want to see all the best film productions of the United States in the British cinema. But here is a case where the President of the Board of Trade could adopt a little of that patriotism about which the Minister of Education was talking the other day, or, at any rate, something of the spirit of national independence to which my hon. Friend the Member for Govan (Mr. Rankin) referred.
I believe that this is still a very serious matter, because less than one-third of the films shown in our cinemas are British films, and a long experience of the quota has produced no better result. There is a second point. There is a state of what I imagine that the Economist would call oligopoly in the cinema trade. We cannot exactly call it a monopoly, but we might


very nearly call it a "duopoly." It is a state of affairs which everybody knows restricts very much the markets for British pictures, and it has made the lives of some independent British producers very difficult, because of the lack of choice of distributors and exhibitors to whom they can go.
This state of what is generally called monopoly in the ownership of cinemas, combined with the load of tax imposed by the State, is responsible for the present squeeze-out of small exhibitors and small producers. Again, there is a constant and persistent tendency, and it has been so in the whole history of the cinema industry towards squeezing out the small man both in the production and exhibition sides, which means squeezing out the independents. I think that this House must make itself primarily responsible for maintaining the position of those who are independent—the men who own cinemas in the back streets, the man who runs an art cinema to provide some sections of the British public with French and other continental films, and, on the production side, the small producer who has been responsible for many of the very best products of the British film industry in its history.
Now we are asked to impose, in addition to Entertainments Duty, another flat rate and ungraduated tax for the purpose of injecting what I know is a much needed financial stimulus into film production, and I want to examine some aspects of that proposal. The President of the Board of Trade brings forward quite complacently a repetition or continuance of the quota system—this unenforceable quota with an average failure among exhibitors of between 500 and 1,000 a year. Are we really fully satisfield with the quota, or with passing it again into law in an unamended form? Certainly, very many sections of the trade, and some sections which the Minister has failed to consult, are far from satisfied with merely repeating the mistakes of the past.
I should like to echo what has been said by my hon. Friend the Member for Uxbridge (Mr. Beswick). Are we satisfied with the definition of British, which permits films to qualify both for the quota and for the levy which are produced by companies wholly financed by foreign interests, the ownership of the

foreign rights of which have been wholly sold out of the United Kingdom, and the leading parts in which are played by foreigners? Was it for such films that the quota system was devised, or was the idea of this levy that it should be a subsidy towards such productions? These are some of the discontents that I would like to voice about the system, but the particular one I want to talk about is one which I have articulated before and I repeat again, and which connects very closely with my criticism of the statutory levy.
The fundamental problem is that of providing a financial incentive to show British films. The quota system, like the subsidy system or the payment of subsidies to producers out of the British Film Production Fund, are indiscriminate and generalised ways of trying to promote the success of the industry. The best way to promote the exhibition of British films and to encourage the production of such films would be the offering of a financial incentive to show British films.
It is, of course, the financial difficulty of film production in this country, compared with Hollywood, and the financial difficulties of exhibitors in this country compared with the position of exhibitors in the American market, because the Americans earn their profits in the American market before their films come over here—it is this financial insecurity that has to be remedied by our legislation, and it does not matter whether we call it a State subsidy or not.
What we are doing is quite plain. We are legislating to try to equalise conditions, which cannot otherwise be equalised, between British film producers and American film producers and between British and American exhibitors, and the best of all ways which could be adopted would be to take the Italian system. The best way of all, together with the quota for the exhibition of British films, would be the introduction of a system of tax relief for the exhibition of British films which would give a greater financial return to the exhibitor and producer and would provide a stimulus both for the production and exhibition of British films.
Of course, I shall be told at once that that would be contrary to G.A.T.T., and that a State subsidy is contrary to


G.A.T.T. Let us be perfectly clear about what is being done here. We are making this formerly voluntary levy on exhibitors into a statutory one. This is, of course, a State subsidy, and we may as well be frank about it. This statutory levy is another tax on the cinema exhibitors in addition to the Entertainments Duty. We might just as well carve out a portion of the receipts from the duty and say, "Let us pay that fraction of the Entertainments Duty into a fund, and we will pay the film producers out of it." The whole thing might just as well be administered by the Board of Trade, although I appreciate the reason why it is not so. It is done because of international agreements, but it is high time that the Government said something about these international agreements. I feel very strongly that we have to face it from year to year, and it is now time that the Government raised this question with the other signatories of G.A.T.T.
Her Majesty's Government have stood out for certain exceptions to the General Agreement on Tariffs and Trade, and the British film industry has a very strong case for exceptional treatment in this respect—an overwhelming case for subsidies, because it is impossible for it to exist unless it receives some State support and encouragement. That support and encouragement should take the form of a financial subsidy from the State or the form of a discriminatory tax relief.
The question of making the voluntary levy into a statutory one, raised in this Bill, brings us straight up against that problem. I agree that when this was a matter of agreement within the film industry and the trade it was not a subsidy from the State and there was no State sanction behind it, but now there are powerful reasons why it should be altered. There is a restrictive element in this which limits the amount of encouragement being given to British film production. The snag, as I see it, is that the Eady Levy in the period up to now has been based on the quantity of cinema attendances as a whole and there is only a given amount of money that comes into the Fund each year. That, of course, will be true of the compulsory levy. That amount is distributed to British film producers on the basis of their receipts at the box office, the relative amount of commercial success they have.
It is obvious that if there is a tremendous expansion of British film production each producer will draw a smaller quantity out of the fund. After British film production has passed a certain point obviously there are diminishing returns from the fund. That is not a thing we wish to encourage. We do not wish to encourage collusion among British film producers to restrict the number of films produced in order that each may be relatively more successful at the box office and get a greater return out of the fund. I believe, therefore, that a subsidy payable out of Entertainments Duty receipts might be operated more flexibly than the proposed statutory levy and could be a more powerful stimulus to expanding production.
I also agree very strongly with my hon. Friend the Member for Uxbridge that payments of the subsidy should not merely be for commercial success. That is the principal test. It is a strictly calculable figure. Producers are paid in accordance with the way in which the cinema-going public receives their films as attested by attendances at the cinemas. But I also believe that the time has come when we should introduce some merit awards for British film culture. If the Italians can do it, and establish a general representative committee prepared to judge on the basis of artistic or social merit films produced each year, I cannot see why that is not possible in this country.
This would encourage small, independent film producers to produce films of high artistic and cultural value and they could receive a portion of the amounts from the fund. The Italians have what I regard as a very progressive system. A small percentage is paid out of taxation, but it is an important amount, set aside for the promotion of film culture. We should do well to consider the establishment of a similar system.
Many times I have raised in the House the question of the difficulties of the quota system. I support the idea that there must be some form of quota to enforce the exhibition of British films in British cinemas; but the quota system is a very blunt weapon. At any given time any quota we fix is too high for the small cinemas and too low for the circuits. That is undoubtedly true about the present quota. Naturally, the small, independent cinemas complain violently against


the quota, and, naturally, a large number of exemptions have always had to be granted under the quota system because so much depends on the actual area of competition, in a big town, in the countryside, or anywhere else. I am sure that the quota system, unless combined with some financial incentive in the form of discriminatory tax relief to promote the production of British pictures, is not a system which gets us very far.
On the subject of the National Film Finance Corporation, I agree very strongly with some of my hon. Friends who oppose the Clause which will permit the selling out of some of the assets of the Corporation. For as long ahead as I can see, the N.F.F.C. will be required to promote and extend the production of British films. The trouble with the N.F.F.C. is that its powers are too limited. It cannot do the job it was established to do unless it has powers of distribution and exhibition.
Such is the vertical integration that has already taken place in the cinema industry from producer to distributor to exhibitor that unless the National Film Finance Corporation can create a guaranteed market it will not do a fully effective job. Therefore, I hope that we can amend the Bill to allow this public enterprise, which has been very important in keeping British film production going in the last few years, to be further extended, because this is an industry in which public enterprise is very urgently needed.
The potentialities for the British film industry are great. The trouble so far has been that the attitudes of Governments have reeked of complacency about the industry. We are satisfied with far too little. I thought that the speech of the President of the Board of Trade, who, obviously, has not had much opportunity to get to know the facts about this trade—he will learn a lot about cinemas as he goes along—went overboard with complacency about the industry. One would never have gathered from his speech that we were talking about an industry which can produce only one-third of the products for its customers, those who go to the cinemas.
In all respects we ought to raise our sights. If we raised our sights and gave greater promotion to the film trade instead of less, we would certainly find a great deal of talent to develop.

7.8 p.m.

Mr. William Shepherd: I do not want to follow the hon. Member for Newcastle-under-Lyme (Mr. Swingler) in all his remarks, but I should remind him and other hon. Members who have spoken that the cinema industry exists to provide entertainment. Some of us who talk a lot about it should be mindful of that. From some of the speeches one would have thought that that would be considered to be the last purpose of the industry.
My right hon. Friend the President of the Board of Trade strayed into the realms of culture. Frankly, I am suspicious when I hear that kind of talk. I must reiterate that the prime objective of the cinema industry is entertainment. If it succeeds in entertaining the public it will get them into the cinemas; if not, they stay outside. The hon. Member also said that we should have a public inquiry. I reject the idea of a public inquiry into the cinema industry as I did, on Friday, a public inquiry into the motor car industry. We have already had two very good inquiries into this industry, which resulted in the Gater and the Plant Reports, and there is no justification whatsoever for any further probing into the facts surrounding this particular activity.
I welcomed the presence of the hon. Lady the Member for Flint, East (Mrs. White) at the Dispatch Box—for, I think, the first time. She gave us a most agreeable speech. Only with one point did I disagree with her rather violently, and that was when she advocated more assistance for second feature films. For myself, I think that the best thing to do with second feature films is to kill them off altogether. They do not have an attraction for a great number of patrons, and secondly, they do not—and here I cross swords with the hon. Lady—provide a useful training ground, except for technicians.
I think that they show the producer, and even the cameraman, the director and the artiste, how not to do the job. It is very much better that we should train our people in conjunction with producers, directors, cameramen and actors who know their job, and are doing it well, than with those who are succeeding only in doing the job very badly indeed. I hope to see, by pressure of economics, the elimination of second feature films.
I welcome the Bill in general, although I realise that the trade has not agreed on it in general; but then, I do not think that this particular trade would agree on much except, perhaps, the total abolition of all forms of Entertainments Duty. Apart from that, I believe that there is a good deal of discontent and dissatisfaction in the trade. On balance, I think that the Government's decision is the right one, and I support even Part III, and not, as the hon. Lady appeared to do, Parts I and II only.
I recognise, as have other hon. Members, that we are in some difficulty in making a proper assessment of the Bill's value and the equity of its proposals when we have not the advantage of hearing my right hon. Friend the Chancellor of the Exchequer's Budget in advance. Today, we have been shown a tempting glimpse—an unusual glimpse, I think—of the Budget, and I do not condemn my right hon. Friend for that as some hon. Members opposite did. It was necessary to assure the exhibitors that, in making the sacrifices inherent in this Bill, they will not be overlooked a month or so ahead when there is some reorientation of Entertainments Duty.
There is no doubt that this industry suffers from having too great an overall burden of Entertainments Duty, and it cannot go on. If he wants to maintain the duty, my right hon. Friend will have to look to other fields of entertainment which are, to some extent, superseding the cinema in the approval of the populace. What I say in support of the Bill is dependent entirely on a proper reduction of Entertainments Duty, and I assure my right hon. Friend and the Chancellor that if I do not think that in the Budget a proper reduction is made, I shall vote, despite the party Whips, against the proposals and will support any reasonable Amendments.
Many people still think that the exhibition side is a lush business. It was a lush business in the 'twenties and 'thirties, when very easy money was made, when fortunes piled up with relatively little endeavour. That situation does not obtain today and the industry is facing a much more serious position than I have gathered from the right hon. Gentleman's speech or from anyone else. When I come to the problem facing the producer

I will try to give my reasons for the concern I feel about the future of the British film industry.
As I see it, the exhibitors' main difficulty is that owing to the advent of television, the film which, three or four years ago, was good enough to make reasonably profitable takes now makes an appallingly low take, and the producer and the exhibitor are thrown back on trying to get winners all the time. As anybody with knowledge of the industry knows, one cannot produce winners all the time, so that we see developing for both the exhibition and the production sides a very serious problem, which is not to be solved merely by the abolition or substantial reduction of Entertainments Duty.
I understand that the Rank Organisation is to close about 100 cinemas this year and, probably, next. It has already closed a great number. According to the Rank Organisation the losses made by those cinemas are so great that even were there to be complete abolition of Entertainments Duty they would still be in the "red." It is not even true to say that small cinemas are the only ones to suffer. The large 4,000-seaters which have been put up in some of our large provincial cities, and of which we have a number in London, lose money week after week. They scarcely ever pay. I therefore hope that hon. Gentlemen will not think that it is only the small exhibitors who suffer.
If a reduction in duty is contemplated, I hope that my right hon. Friend will look at the rebate system, which I tried, with very little support, to put over four years ago. If we want to have the small exhibitor—and I do, because he is socially very desirable in certain areas—this system, whereby the first, say, 20 per cent. of duty is rebated, is by far the best way of assisting him. Here I should like to stress that although some people talk as though the business is on its last legs, the fact remains that despite the growth of television, attendances at cinemas are still 15 to 20 per cent. above those of 1938. It is pulling in a lot of customers, and we must not be too dispirited.
There is the question whether producers will need the assistance of a levy. I say that the producers will need this assistance more in the next few years than they have


needed it in the past few years. My outlook on the production side is not as rosy as that of some hon. Members who have spoken, as that of the noble Lord in another place who moved the Second Reading of this Measure there, or that of my right hon. Friend the President of the Board of Trade. I believe that our cinema production will become more and more hazardous. There is no doubt that it is becoming more hazardous, as one can see very easily by looking at the latest Report of the National Film Finance Corporation. Of the films likely to be profitable without the Eady Fund there were 12 in 1952; 10 in 1953; 5 in 1954; 7 in 1955—and I think that for 1956 they are not likely to be very much better than they were in 1954, if as good. Therefore, the financial situation of British films is not improving, and there are one or two reasons for thinking that this difficulty is a very real and a growing one.
The first reason, of course, is the effect of television. That has meant that it is no longer, or hardly ever, possible now to make a film for about £120,000 which will draw in the customers. Some hon. Gentlemen talk about reducing British film costs, but we are already trying to produce films on too low a budget, and on that too-low budget the products have not sufficient attraction to draw the customers. Let me remind the House that in 194jjss8 we were spending on first feature films an average of £250,000, and during a time when costs have risen very sharply we have brought that average down very materially; indeed, we have brought it down to the point where the product is no longer big enough and attractive enough to bring in the customers.
The producers' dilemma is that although they realise as well as anyone else that they cannot get the customers in with a film costing £120,000, they cannot afford to spend as much as £250,000 or £300,000, which is really the sort of figure one should spend to produce the film that will bring in the customers here and overseas. That is really a great dilemma for the British film producers, This tendency is made worse by what has happened in America. The Americans, since they have had a smash from television, have "gone big" and, in the true American fashion, have "gone big"

in a very big way. As someone said the other day, they could produce the Ten Commandments and spend a million dollars on every Commandment—and that is roughly the order of doing it.

Mr. Beswick: Would the hon. Member refresh our memories by telling us how much such films as "Genevieve" and "Reach for the Sky" cost? They seemed to be very worth-while films, and were not big in the sense in which the hon. Member was speaking.

Mr. Shepherd: The figure for "Genevieve" was a low budget figure and a film like "The Kidnappers"—an immensely successful film—probably cost less than "Genevieve"; but one cannot strike ore quite as rich as that all the time. One must have diversion of location, spectacle and big scenes to make up for lack of genius at times.

Mrs. White: Mrs. White indicated dissent.

Mr. Shepherd: The hon. Lady shakes her head, but the job of providing a stroke of genius such as "The Kidnappers", or comedy genius as rare as that in "Genevieve" is not really easy of attainment. No one can do it all the time. It is not that we are worse than anyone else; it is an immensely difficult task.
I say to the House that the British cinema industry is facing a very real problem, and I do not see how we are to get out of our present difficulty. I think that we had last year a rather bad run with our films. We have not struck the ore very rich in the last 12 months. It would be wrong to say that there is any sort of malaise, but the film industry is not in a very healthy condition at the present time.
I should like to suggest one or two things that might be done. First, I think that we must get more breadth to our films. We are a small country, leading a rather quiet life in many ways, with no great drama in our society, and the cinema suffers to that extent. If we were a great country like America, with vast drama, vast progress, corruptions and all the kind of things which can be dramatised—[Laughter.] Well, corruption can make a really entertaining film, and entertainment is the important thing in the cinema industry.
As I am reminded, the wide open spaces of America provide Americans with quite attractive films, so we are at a disadvantage and I think that we have to tackle it by getting into our cinema production more people from outside. As my right hon. Friend the President of the Board of Trade said, we ought to try to make this country an international centre of production. I think that we can do that.

Mr. Beswick: I thought the hon. Member said "corruption".

Mr. Shepherd: I said "production." I know that the hon. Gentleman may be more interested in the former, but we will let it go.
In what way can we help British films to get a bigger export market? That is the critical question and we must find the answer to that problem if we are to extend our markets overseas. There is one way which I will suggest to my right hon. Friend. It is this. Instead of limiting the production fund to the revenue earned annually from the home-shown, we ought to consider including the export revenue of films and let those revenues qualify for a production subsidy.

Mrs. White: Would the hon. Gentleman make it clear that that would be only if those revenues were remitted to the United Kingdom?

Mr. Shepherd: It would be only in respect of revenues remitted to the United Kingdom but, as the hon. Lady, who knows this industry well, will be aware, that would have certain advantages in certain directions.
I will turn to the question of the statutory levy. I have always accepted the idea of a levy and I have always preferred a statutory one to a voluntary one. First, if a levy is an instrument of Government policy the rather unpleasant work attaching to administering it, and squeezing it out of the exhibitors, has to be undertaken by the Government. Therefore, I welcome the change from the voluntary to the statutory levy.
The second reason is that I think the producers must be assured of continuity, which they are not in present circumstances. The statutory levy would give them that assurance of continuity. I think that it would be better for the exhibitors

themselves, because once we have this levy as a statutory provision, there will be no argument but that the levy is a tax. It is a tax and exhibitors can rightly say when discussing the tax question with the Chancellor of the Exchequer, "We add on what you take in direct tax the levy because it is statutory and a tax"; they are better able to argue with the Chancellor on that basis. It is better for the Government to have this levy in statutory form. It is not really a good thing for the Government to have the exhibitors threatening them with withdrawal from time to time.
I do not think that the argument about the poor section of the trade paying for the rich really applies. In the cinema business there are various people concerned. Roughly, they are the Government, the exhibitor and the producer, and the cake is shared out between the three. It is not really a question of the richer receiving subsidies from the poorer.
There is a case being raised today about whether the levy ought to be applied to films made largely with American capital in this country. I want to say a word or two about that, because I know that it is disputed in many quarters. I believe very strongly that the levy ought to apply to what is known as the Anglo-American film. I will give the House reasons why I think so.
The first is that we need these films to fulfil our quota. The number of good British films about is not so great as we can dispense with these Anglo-American productions. The second reason is that the Anglo-American film brings about an exchange of artists, directors and producers. I should like to impress on the House the importance, in my view, of getting artists, producers and directors in from other countries to mix with our own people and show them their ways. They are to contribute a great deal to our industry by so doing, and that is another reason why I support the application of the levy to American production.
The third reason is that these films tend to open the door to British films in the United States. I know that the door is not really open at all and that there are many obstacles which we have to overcome in getting distribution there. Nevertheless, the fact that the American public is becoming gradually used to films bearing some of the hallmark of


British imprint, not entirely, has eased a situation which is extremely difficult for us, and I do not think that we should neglect the advantage which it confers upon us.
The fourth reason is that the Americans have done us a service in agreeing to the Eady Levy on the films that they show in this country.

Mr. Beswick: Why?

Mr. Shepherd: The American film companies are quite entitled to dispute the right of the British Government to put a tax on their films shown, for the purpose of giving it to British producers. The hon. Gentleman will be aware that 70 per cent. of the British film time is, in fact, occupied by American films. The Americans are contributing as to 70 per cent. towards the Eady Levy.

Mr. Beswick: No.

Mr. Shepherd: The hon. Gentleman says "No." but it is perfectly true. It is true, I think, that the Americans dispute that, but they gave us a waiver, and I, for my part, believe that we should reciprocate.

Mr. Beswick: It is Entertainments Duty.

Mr. Shepherd: We are not talking about Entertainments Duty; we are talking about the Eady Levy.
In the last month or so, we have witnessed the setting up of a new organisation for the independent producers. Nobody has mentioned that today, and I should like, if I may, to "give it away." I have nothing against the British Flm Producers' Association, which is doing a very good job but I feel that there is a need for an organisation to serve the independent producers. I hope it will result in the independent producers getting a better deal and that it will do something towards setting up an organisation to deal with the sales of independently produced films overseas.
This matter of the sales of independently produced films overseas is of crucial importance to the independent producer. I cannot too strongly press upon the House the need for some action being taken.

Mrs. White: Would the hon. Gentleman develop this most interesting idea?

Would he suggest that that might be one of the possible extended functions of the National Film Finance Corporation?

Mr. Shepherd: I was coming to that; the hon. Lady has anticipated. But before I do so, I should like to quote one example to illustrate the problem; I am sorry I cannot give the House the name of the film, because I have been asked not to do so.
A film was made in the last three or four years which had an exceptionally successful showing in this country. It was not a film which was limited in its market to the United Kingdom. It netted for its producers £261,000, which, hon. Members will agree, is a very handsome return. So far, in the intervening three or four years, the overseas sales of this highly successful film amount to £7,000. This is due, in the main, to the fact that there is for independent producers no effective overseas sales organisation. The Rank Organisation, very nobly and very ably, has set up a first-class overseas distribution organisation, but we must realise that films must be sold overseas and other goods have to be sold. It is no good pushing out a film with a batch of a hundred others for a salesman to sell as best he can. An effort must be made to sell British films overseas.
I hope that the National Film Finance Corporation, together with the new organisation for independent producers, will apply its thoughts to setting up an overseas sales organisation, because that is an absolute prerequisite, I believe, to the success of independently produced films. The independent producer is not merely an ornament to our production. He is a very important fellow indeed, for more than one reason. I will give the House just one reason.
The film production industry is, in many ways, a game of chance. It may well be that the reading department of one big organisation will read a hundred novels or scripts submitted and turn down the lot. Another producer reading the same novels or scripts may decide that one of them is just the thing for him. The big organisation may turn it down because, six months ago, it produced something similar, or it does not consider that the fashion for that type of film is what it was a year or so ago; there may be a number of very good reasons. But


along comes another man with a different outlook who picks up that book or script and makes a successful film out of it.
Diversity is absolutely essential for the film business. Because the life of our independent producers depends so much on getting overseas revenue, I hope that something will be done very soon by the Government, by the National Film Finance Corporation, and by the new independent producers' organisation, to establish an effective selling organisation.
I will say no more about the Bill except commend it to the House. On the whole, I think that it will serve us well. I urge upon my right hon. Friend and my hon. Friend the Parliamentary Secretary that there is really no room for complacency about the British film production industry. It is in a much more difficult position than the majority of people realise. We have very good fellows in the business. We have, I think, some very good young men coming on in the job. But, nevertheless, we are facing a very difficult situation, and it will need all the resolve of the industry to face its drastic problems, it will need the backing of the Government, and it will need the good will of all concerned, if the production side is to be put on a really profitable basis.
Hon. Gentlemen opposite have talked about the demise of the National Film Finance Corporation as if it would be a matter for regret. It would not to me, because I know that if the Corporation went out of existence it would mean that production was on its own feet, which is what I want to see. I believe that it can stand on its own feet.

Mr. Beswick: It still wants finance.

Mr. Shepherd: I hope that the industry will rally its strength and make sure that in the near future it does stand on its own feet.

7.36 p.m.

Mr. Harold Lever: I have long understood that the American film industry was said to have climatic and other advantages of a physical nature over production in this country, but it is left to the hon. Member for Cheadle (Mr. Shepherd) to make it known that it is the spiritual climate of this country which is defective rather than the physical. Apparently, nothing ever happens here, and unless the English

yokel's simple life is to be stirred up by some of the things we see in the world of American films, nothing notable is likely to be produced by British film producers. Apparently, we lead too quiet a life. I often feel that it is in these debates that the most revealing things are sometimes said.
It has been said that we must have a British film production industry because otherwise the British way of life and spiritual outlook will not be made known to the other countries of the world. I should like to say to those hon. Members who take that view that there are fairly solid grounds for believing that the outlook and way of life of this country will not perish even if British film production is rather less than it is today, and will not be likely to spread in any spectacular fashion even if British film production is increased by the wise administration of the Government.
I should like to add also that if, indeed, we were truly dependent for the projection of British spiritual values and outlook upon British film production, less than justice would be done to an outlook and set of values which, I believe, endured for a little while before the film industry came into being and which, it seems to me, might well survive for a little while after the film industry ceases to be here.
The hon. Gentleman the Member for Cheadle said that when he heard the word "culture" he was suspicious. I think it was Goering who said that when he heard the word "culture" he reached for his gun. I sometimes think that when the film industry uses the word "culture" it expects the House of Commons to reach for the public purse. I am not sure that that reflex action should be as automatic as it sometimes has been in the past.
I see some danger in such occasions as these. I am not complaining of the latitude with which the rules of order of the House are administered, Mr. Speaker, but these debates always range very widely. One is never quite sure why the President of the Board of Trade attends. For the most part, he pleads ignorance of the film industry and then asserts some sort of moral authority upon matters of culture and artistic taste. As far as I could judge, most of the President's speech consisted of a premature


revelation of the Budget statement and some analysis of the ingredients which go to the making of a work of high art. It is true that he disavowed the Budget Leak, but, if he were here, I should like to reassure him that he did say it. He will probably prove right in the event, if he has not spoilt it by a premature announcement, and he need not worry about losing his post, because it is only the Budget leak in private which is punished so drastically. A little leak to the entire House of Commons, even if inconveniently and prematurely made, is not likely to result in dismissal. The right hon. Gentleman need not be very troubled on that account.
Amid all the talk of spiritual values and culture and the projecting of the British way of life and so on, there have been generalisations about the British character. British determination, the virtue of the British and the like, which one always hears on such occasions as this, and it seems to me that we ought now to get some basic principles clear. First of all, what we are discussing has nothing to do with the promotion of culture directly. What we are discussing is the survival of British film production on a commercial and profitable basis, and what we are discussing is how public money should be provided to that end.
I should make it perfectly plain that I would resent very strongly any attempt under the guise of this Bill to perpetuate the kind of loose ideas which have been prevalent in the past. We are providing in the Bill, among other things, the financing of people with
reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis.
We ought to dismiss all irrelevant factors such as the suggestion that we are promoting the avant garde of British culture.
I would not wish even mildly to dissent from what my hon. Friend the Member for Flint, East (Mrs. White) said when she made her so impressive first appearance on the Opposition Front Bench—which, I hope, will prove to be her début upon a permanent position.
However, I hope that the President will bear in mind that the House of Commons has not authorised and is not authorising helping adventurous film producers or the

development of artistic tendencies or anything of that sort. I say that not because I am against them. If the Government were to introduce a Bill entitled to be a Bill professedly for the promotion of adventurous film producers and for subsidising them to the extent of £3 million or £5 million or £10 million or even £30 million out of public funds for that purpose, I should consider it very carefully and might support it. I am all in favour of a Bill to assist the production in Technicolour of Shakespeare's tragedies, for instance, for that might be a good thing towards the production of cultural films exhibiting the British outlook and that sort of thing.
But let us be honest about it. Let us not pretend to be doing what we are not. That is not at all what we are now about. We are not devoting public money to those cultural purposes, which would be perfectly laudable. It would be welcomed greatly if we had a Bill to bring back the Crown Film Unit, for instance, which has been so brutally and wantonly destroyed by the Government, and which was a non-commercial and cultural film production unit which ought to have been preserved.
What we are discussing today is how to intervene in an industry which is run on a commercial basis, and we are discussing the provision of finance to people who are running it on a commercial basis. We must be quite clear that the producers we are seeking to help produce films for a cash profit. They are not producing films in the hope of reclining one day in a laurelled spot in the hall of fame. They are producing films for cash, and we ought to be very careful about the provision of public funds to make profits for people unless it is justified.
The next question we have to ask is, is it justified to pay any public funds at all to the British film production industry? The answer would seem to me—apart from the film bank, with which I shall deal briefly—to be clearly, No. There is not the smallest evidence that the British film industry as a whole has not enough money in its total take to be quite self-supporting. It ought not to be a pampered industry, and we ought not to make it so. If we consider the industry as a whole, it has ample funds to support


production, distribution and exhibition without coming to the public purse for any subsidy. It has plenty of funds. It may be that reallocation of those funds is needed. It may be that the operation of the large circuits or of monopolistic distribution arrangements and that sort of thing may have warped or be warping the direction in which the total take of the industry goes, so that one section is excessively rich while another section is excessively poor.
I do not know much about this industry, and I cannot exchange with other hon. Members those hints and half-statements that are delivered from time to time across the Floor of the House on such occasions as this by those more knowledgeable than I am of this industry. I do not know anything very much about this industry, but whenever I have seen or met the film tycoons they have seemed to me to be the least spectacular examples of poverty, and I often wonder why on occasions such as this, when we have film debates, we are always pressed to believe that they are about to fall into decay and starvation unless we contribute to them out of public funds, so that a Hungarian producer can bring over a Greek actress accompanied by a French ballet dancer to make a film which might be shown throughout the world, which might earn a few thousand pounds abroad, but which probably will be most successfully shown only in Lancashire. These things baffle me.
Therefore, I summarise my argument and say that the only Government intervention that is morally justifiable in what is primarily a commercial venture is not to provide public funds and to pauperise the industry or to subsidise it but to enforce the reallocation of the total take of the industry so that enough money goes to the production end to ensure that that part of the industry is preserved, if possible, not because of cultural questions so much as because we are anxious to develop as wide a range of industry as possible.
It is accepted, I suppose, that in a modern industrial society the townspeople must have their celluloid dream a week, and chauvinism now extends so widely that we want them to dream British as well as buy British, and so we may as well encourage the existence of

the industry for the production of films of that character in this country.
However, we ought to ensure that the total take of the industry is reallocated, if we want to perpetuate the production end of the business and enable the industry to continue existence without pauperisation, without the use of public funds.
As my hon. Friend the Member for Flint, East pointed out, the Bill does not tell us how the scheme is to work. We must wait to see the regulations. It may be desired to consider in Committee on the Bill how to make sure that the total take of the industry is reallocated so that more goes to the producers to keep them in existence and that less goes to the—parasitic, perhaps—sections of the industry, or the sections that have taken too much in the past. If that could be ensured we would support the Bill, but we shall not be able to support it if it merely takes public money to be handed over to subsidise British film production because that, for reasons I have already given, I do not favour.
I think the hon. Member for Cheadle was quite right in saying that the whole attitude to the levy is possibly wrong. I do not know how it worked in the past, but if in the future it is merely to be used to set up a permanent structure by which more is taken from the exhibitors, in effect, and handed over to the producers by law, and in a somewhat complicated manner, we shall be liable to find that one of the reactions of the exhibitors, who seem a well protected section of the industry and a well organised section, and a nice, compact section, who know their way about, in the end may be to reduce their bids for films, and then we shall be back where we started from in the first place. I know nothing of the industry, but I see the hon. Member for Cheadle nodding his head in agreement, and so it seems that he agrees that this is not the way to introduce a reallocation.

Mr. Shepherd: If there were a substantial reduction in the taxation, it is quite clear that film hire, which has been sliding in the last couple of years, would increase.

Mr. Lever: I suppose the exhibitor depends on what he can afford and that he bids what he can afford. The Government say he has to pay £100, say, for a


film through the levy. Surely the exhibitor will knock that off the price he bids. I fear that in the not too distant future we shall be back where we started, with the film producers not very much better off.
I like to see this come out in the open. I do not like involuntary voluntary levies. Everybody knows what happened with the voluntary levy in the past. At least. I am assuming that that was what happened, unless of course the film industry is more charitably and philanthropically disposed than I am and more public-spirited. The only possible reason that springs to my mind and naive imagination why some people in the industry would pay these large sums for distribution among other businesses concerned is that they were told that if they did not do it voluntarily they would have to do it involuntarily. It seems to me that this past esprit de corps and this almsgiving in the industry must have sufficiently weakened by now for the Government to make it clear that the payment is, after all, involuntary.
We ought to come out in the open on the whole thing. This business of the film industry usually occupies a quiet Friday afternoon in the House and, perhaps, would have occupied one this time had not the Chief Whip realised in time that I had recently recovered from laryngitis, Nevertheless, I do not propose to speak at great length.
This matter has an extraordinary history. I will not go into it in detail, but it started roughly with one of my right hon. Friends coming to the rescue of the production end of the industry and, very properly, bringing in the original Measure. We were told that this was no substitute for a general policy which would be laid before the House. We were told that a well-thought-out and considered scheme from the Government brain would be soon before the House to put the industry on its feet. This would be formulated and made known to the world and the Measure then proposed was only temporary. It was added that nobody would consider subsidies. The idea was unheard of. In any case, the Measure was temporary.
Then the Act was renewed three times, temporarily, and it is now being renewed temporarily for eighteen years, with some

of my hon. Friends so foolish as to take seriously the thought that if some greedy capitalist comes along anxious to take over the profitable business of the National Film Finance Corporation and do the lending, the whole thing will be disbanded. I know nothing about the film industry, but I think that I can calm the fears of my hon. Friends. There is no danger of these rapacious gentlemen from the City seeking to oust the Corporation from the functions that it is discharging. My hon. Friends may be perfectly happy that Clause 12, which provides for that eventuality, will never be brought into effect.
The Government say that the Measure is temporary and that there is no subsidy, but the Measure is obviously permanent and there is obviously a subsidy. It reminds me of the young lady whose only defence to the lustful aggression of the male sex was to say "No" and do nothing further in her defence, only to find years later that her virginity was held to be in doubt because words and not deeds had been taken as operative tests. In the same way, the Government say that there is no subsidy and no permanency in the Bill.
It is a pity that we are not told what the Government's policy is. We were promised this policy years ago, but there is no hint that we shall have more on this occasion. The President of the Board of Trade will have come into office for a period and learned about the film industry, and there will be no care that he will lay down more gladly when he is promoted to a more important and exalted state in the Government than this responsibility. He will be glad that he will not have to worry any more about producing a policy for the film industry, and he will leave it to his successor to extend "temporarily" for another century or so the financial provisions of the Bill and the levy.
I spoke very strongly in criticism of the National Film Finance Corporation in 1954, but I am not in the least opposed to the Corporation's function as it is now stated to be. I am very much in favour of a film bank to facilitate and make available financial provisions of a specialist character, but on a commercial basis, to the commercial producer. I beg my hon. Friends not to think that I am opposed to making finance available


for non-commercial purposes, but I cannot support such proposals in order to help commercial people who are out to make a profit. There is no reason why they should not pay the commercial rates and not depend on Government money.
The Government alone at present have sufficient incentive to provide a few millions for film finance, because private banking has many other lucrative opportunities for putting up its money in other directions. Based on the past history of the film industry and its uncertainties, the formerly over-optimisitic banks are now excessively pessimistic. The industry is extremely complex to finance. It is more than the average bank can do to cope with the technicalities and the difficulties of the industry. It requires a films bank for the purpose, and I welcome the films bank in its present form.
I am very relieved to see that, on the sordid side of the duty of the Corporation to pay its way, a completely different attitude prevails, under Clause 11, to that which it was my duty to oppose very vigorously and at length on the last occasion. The Clause states:
It shall be the duty of the National Film Finance Corporation to exercise and perform their functions in such manner as appears to them best calculated to secure the avoidance of defaults being made in the discharge … of their obligations with respect to repayment of the principal of the loan and the payment of interest on any sum for the time being outstanding in respect of it.
In other words, the Corporation must exercise reasonable prudence to preserve its funds and make them available for film production.
I should like to know from the Parliamentary Secretary whether the Corporation has taken shares or scrip in payment of debts due to it as provided in the previous Act. In other words, has the nefarious scheme which was intended to be operated, and which the then President of the Board of Trade as good as said would be operated, in the case of British Lion been put into effect? If not, has the Corporation taken steps to enforce its security in that case or in any other—because I gather that the receivers have taken over at British Lion? Have any other enterprises been enabled to pay their debt by the issue of scrip? Does Clause 11, for practical purposes, now replace the Section in the previous Act which

allowed the National Film Finance Corporation to take paper instead of the full payment of the debt?
The Parliamentary Secretary may not know it, but the former President of the Board of Trade, now the Chancellor of the Exchequer, said that the provision allowing the Corporation to take scrip instead of demanding payment was the ordinary requirement of a prudent creditor. I am curious to know, if that would be required by a prudent creditor, why the prudent creditor has never exercised his prudence since 1954 and will no longer require the facilities in the years ahead. Perhaps the Parliamentary Secretary will explain that to us.
I have trespassed long enough on the time of the House. I will conclude by saying that I am suspicious of the levy and of the thought behind it. I doubt whether it will work on a long-term basis. What is wanted is an effective reallocation of finance within the industry and not a subsidy from public funds. I am glad to see the film bank put on a sound, businesslike basis, and, because of its basis, I welcome it and shall be glad at any time to support its continuation as a permanent support for the British film production industry.

8.0 p.m.

Mr. Farey-Jones: This has been an extremely dismal debate. Most of the speeches have sounded like dirges or laments for a dead, or at least dying, industry. I confess that I do not find in the Bill much hope for the future.
I am very disturbed that all round the country, particularly in small seaside towns and villages, we find small cinemas which are already closing or will be closed in the near future. They are largely used by people who have no television sets, and one should bear in mind that there are far more people without television sets than there are with them. I hope the Minister will do his best to ensure that in some way hope for the small exhibitors can be preserved.
I see no long-term policy for the film industry, and I have not heard of one in any speech today. There is an essential point that I wish to put to the Minister. We hear and read about the European Common Market. From the very beginning the British film industry has lived in the shadow of the American colossus


because from the start the American producers had a vast, assured market of at least 150 million people, excluding certain parts of Europe, to which they could dispose of their films.
Our film industry today has its biggest opportunity of the century. If we are going into a common market in Europe, there is no industry which can make a more immediate and greater contribution than our film industry. I should like the Minister to tell us whether the National Film Finance Corporation could be used at least to establish a British European films corporation into which the Germans and Italians might be brought from the beginning.
Leading film producers in Germany and Italy have had meetings to discuss the possibility of the realisation of that idea. If we in London approach the subject now, and if the Minister will use his good offices for that purpose, I think that we should be able, in about seven years' time, or even less—I am not familiar with the technicalities of film production—to create throughout the whole of Europe an assured market even greater than that of the American film industry; and if that market were centred in London, at least something worth while would have been achieved.

8.4 p.m.

Mr. Douglas Jay: I did my best to cheer up during that last speech, but I was not entirely successful.
The President of the Board of Trade said, at the beginning of the debate, that he was a novice, as I am, in this labyrinth, but he struck me as being rather a novice in Budget matters, also. He told us, in a sotto voce aside, that the Entertainments Duty was to be reduced in the next Budget.

Sir D. Eccles: I knew before the right hon. Gentleman rose that that was the sort of thing that he was going to say. I should like to deny that I said that I knew it was to be reduced. The right hon. Gentlemen, too, knows that that is not true, but I must say that it is in his nature to say it.

Mr. Jay: Since the right hon. Gentleman says that, I will remind the House of exactly what he said. First, he told us that the Chancellor would take account in his Budget of the consequences of the

Bill. That in itself means nothing at all. Then the right hon. Gentleman, asked by one of my hon. Friends whether that meant a cut in the Entertainments Duty, used the following words, according to my record, and as the same words are on the tape I suppose that the Press reporter heard them as well, "There is no other way to do it."
Those two statements, taken together, can only mean, as far as I can understand them, that we have been informed that the Chancellor is to make a cut in the Entertainments Duty in the coming Budget. I do not know what the Chancellor will think of this extraordinary statement, but I can assure the Ministers representing the Board of Trade that the industry itself will now confidently expect a substantial cut to be made. Since the rule about anticipating the Budget has apparently been suspended by the Government, perhaps the Parliamentary Secretary will tell us just what the cut is to be. We really do not know what to expect now that all the ordinary rules have apparently been suspended.
I certainly do not advise the House to vote against the Bill, but there are still a number of questions which the Government ought to answer before we give it a Second Reading. The President of the Board of Trade asked why we had to have a Bill of this kind at all, and he gave the rather odd answer that it is because the industry is such a risky one. That argument might carry him a very long way if wherever there was an industry which took risks we had to have wholesale Government intervention. I do not believe that that is the right answer.
I think that the real answer is that ordinary unfettered private enterprise would be unable, as experience shows, to maintain a British film production industry. Indeed, on the Government's own showing by the introduction of the Bill, threefold Government intervention is necessary to make sure that even 30 per cent. of the films shown in this country are British. Not only do the Government admit this, but they continue, and, indeed, reinforce, the two main public props of the industry which were set up by the Labour Government—the Eady Levy and the National Film Finance Corporation. We are grateful for the compliment implied in that. I merely wish that the Government would


imitate the Labour Government in even more important matters.
Apart from my hon. Friend the Member for Cheetham (Mr. H. Lever), who always has a very individual and entertaining point of view, I do not think there is an hon. Member in the House who seriously disputes the need for the Bill. I would say to my hon. Friend, who always takes a hard-headed, practical business point of view, that, apart from any other considerations, there is a hardheaded reason for all this action, and it is that, without some aid to the British film production industry, this country's dollar problems would be infinitely more difficult to solve than they are.

Mr. H. Lever: I did not say that I objected to help being given to the industry. I merely said that it is an ineffective way to produce the help needed, and that I doubt whether the Bill will produce the desired results.

Mr. Jay: I agree with my hon. Friend to some extent. We must look very carefully at the method adopted. I am glad to say that the right hon. Gentleman spoke of the more promising export prospect for the British industry and said that in both the United States and the Commonwealth prospects were improving.
I am tempted to add that when, last autumn. I was visiting Moscow as a tourist, full of curiosity. I was struck by the fact that the Russian public was flocking to an Italian film festival and was obviously extremely enthusiastic about seeing non-Russian films. I was equally struck by the fact that Mr. Eric Johnson, whom we all remember well and who was still representing the American film industry, was negotiating for the showing of American films in Russia on a large scale. I asked a number of Russians responsible for the showing of films whether they showed British films, and whether they would like to do so. The answer I always got was that they would be very glad to do so, that there was a demand for them, but that the British industry always asked too high a price. I cannot evaluate the truth of that answer, but it may be worth while for the Board of Trade and even the Rank Organisation to look into it.
I suggested to some of the Russians that Richard III could be a suitable film

for them to see, because it might fit the current propaganda against the cult of personality and the general idea of blaming everything on the dead dictator. However, I did explain to the Russians that they must not suppose that Richard III represented the current British way of life.
Why do we have to have all this help for the British industry? The hon. Member for Watford (Mr. Farey-Jones) was right in saying that it is because the American producers have a huge American home market and can regard the British market as a supplement. But we have still to ask why we have to adopt the rather odd device, on top of the quota and the Finance Corporation, of a compulsory levy on one section of the industry to pay for another. One feels inclined to ask why, if the exhibiting section of the industry is so profitable, ordinary business bargaining does not manage to transfer part of its revenue to the production side.
I suppose that the answer is partly because of the competition of the American film. But I suspect that one other reason is the semi-monopoly position—and some say that it is getting worse—of the exhibitors who confront competing independent producers and who put producers at a severe economic disadvantage. If that is so, it makes one at least wonder whether, when the State is stepping in to redress this balance by legislation, we ought not to do something to weaken this growing monopoly ownership on the exhibition side.
Apart from my hon. Friend the Member for Cheetham no one has seriously questioned the inevitability of the Eady Levy plan. It was devised when I was at the Treasury to make sure that what the Exchequer relinquished in entertainments tax went to the producers and not to the American companies or the big British exhibitors. It is a little odd to some of us to discover—and the President himself did not discover it until this afternoon—that the so-called British films benefiting from the levy can include films produced in Jamaica by American companies with American stars.
I understand from the experts that the rights and wrongs of this question of Anglo-American films are extremely complex. It is true of this industry, as


Oscar Wilde said, that truth is seldom pure and never simple. That applies to the argument about American films. We have had an argument about whether we are paying a subsidy under the Bill. In substance, what we are now to do quite bluntly by the Film Fund Agency is to continue raising revenue in both tax and levy combined on all films and to pay what is really a subsidy discriminately to British or Commonwealth films. I suppose that, technically, the levy is not public money, as it does not come from the Budget, but if we are to use compulsory Government and Parliamentary powers to collect it forcibly, in economic reality it is a subsidy.
Frankly, I do not object to that for the reasons I have given. I do not necessarily object to calling it a levy, if that serves some useful purpose. No doubt a subsidy by another name smells a good deal sweeter, but the Government ought to explain why we have to do it in this rather peculiar way. For, even if we agree to call it a levy for diplomatic reasons, I am not altogether convinced that we need the complication of this rather rarified Agency to pay the money.
Why should not the Board of Trade do the job? Either the Agency is to do a job of pure calculation, what certain noble Lords in another place rather irreverently called a job for clerks, in which case we do not really need to have this imposing statutory body, or else, as I suspect, it is not merely calculation, but involves a good deal of discretion—perhaps not including trips to foreign countries, as was mentioned by an hon. Member opposite. If there is discretion and trade advice is necessary, why should not the Board of Trade do it, advised, no doubt, by the Film Council? We have already got the Board of Trade, Customs and Excise, the Film Council and dozens of trade associations engaged in this business.
For the sake of simplicity, I wonder whether we should set up yet another body. I ask the Parliamentary Secretary, having had some experience of the Board of Trade, whether this is just a device to avoid Parliamentary Questions about the operation by those people managing the Agency. If it is not, will be tell us whether it will be in order to put down

Parliamentary Questions asking what the Agency is doing?
We are made a little more suspicious about this by the inclusion in the Bill of the contrivance for doing almost everything by regulation. Collection of the levy will amount to taxation of the public. What the House is being asked to do is to pass an enabling Bill to allow the Board of Trade, within very wide limits, to tax the cinema industry and the cinema-going public. If we are doing that, we ought to be very sure when we get to Committee that this is the proper and best way of doing it.
On the other hand, on this side of the House we welcome the continuation of the National Film Finance Corporation. With the possible exception of my hon. Friend the Member for Cheetham, everyone agrees that this amount of public enterprise is necessary in the industry. There is common consent that it has been a success in sustaining British film production. At the same time, we have some doubts about the apparent attempt of the Government in Clause 11 financially to tie up the Corporation as if it were intended to be an investment trust rather than an aid to film production in this country.
Of course, we do not want the Corporation to lose public money. But if the object were simply to lend money without risk to make a profit, we should have thought that there would have been no need for this kind of Corporation, because banks and ordinary financial institutions would have done the job. Surely, the object of the organisation is to enable independent British film producers—and, thank heaven, there are such producers—to experiment and take reasonable risks in so experimenting.
As for Clause 12, in which the Government seem suddenly to have reverted to their doctrinaire passion for selling public property back to private owners—usually at a loss to the taxpayers—I am not nearly so hopeful as is my hon. Friend. He said that he was quite sure that we would not find the Corporation being sold back to anybody in the City of London. It is not the City of London so much as Los Angeles or some other part of the world which comes to my mind. Have the Government any plan to sell the Corporation to M.G.M. or, perhaps, to the Texas Oil Company?
Upon the question of the timetable, about which my hon. Friend the Member for Flint, East (Mrs. White) asked in her comprehensive speech, can we also know whether or not the Corporation goes legally out of existence on 9th March, if the House has not passed the Bill by then? If so, is the President of the Board of Trade really expecting the House to examine the Bill properly in all its stages by the end of Thursday of next week. That would be an extraordinary idea of Parliamentary procedure. I am not saying that that is what will happen but, if not, will the Parliamentary Secretary explain clearly how the Corporation will continue legally and practically to exist after 9th March?
Finally, hon Members on this side of the House could have wished that Part III, which prolongs the quota system, had been left out of the Bill altogether. Here again, the Board of Trade appears to have conducted itself in a most extraordinary fashion. This may be the fault of the previous President of the Board of Trade. Ministers move round in this Government, so that we can never blame the man who is still in office. The previous Minister wrote to all sections of the industry last February, asking them for their views upon two questions—the levy and the Corporation—and saying that the quota would be left over for discussion later. He wrote again in August last to the same effect.
The next thing that the industry knew about the matter was when the Bill appeared with the whole machinery for the quota inserted. The President of the Board of Trade now blithely says that the opportunity could not be missed. That is a rather extraordinary way to proceed. I realise that a promise was wrung from the Government, by two very pertinacious noble Lords, speaking for the Labour Party in another place, that there would be consultation before any amending legislation was introduced. This quota legislation does not expire until September, 1958.
Why not, then, introduce legislation on the quota, together with the necessary amendments and after the necessary consultation, during the 18 months which are still available—whether or not the Government remain in existence for that time—between now and September, 1958? If the Government's view is that that is not

feasible because there is no Parliamentary time, or they think they will not still be here, why did they not have these necessary consultations before introducing the Bill?
The Parliamentary Secretary might also tell us for certain whether amending legislation is to be introduced and, if so, how soon, and, also, when the consultations will be started—because all sections of the industry are anxious and curious to know that. Why cannot the Government drop Part III altogether? That would both allow more time to examine Parts I and II adequately and also, later, to have a proper discussion upon the quota legislation.
As a protest against the muddled fashion in which the Measure has been presented to the House, some of my hon. Friends may feel inclined to vote against the Second Reading tonight. [HON. MEMBERS: "Hear, hear."] Apparently some do. I do not advise them to carry their protest to that length, because we must have the levy and we must have the Corporation. No doubt the Parliamentary Secretary also thinks that he must have his dinner—but that is not an argument that weighs with us. In spite of that I invite the Parliamentary Secretary to answer the questions that we have asked and, particularly, to tell us frankly what timetable the Government have in mind for the Bill.

8.25 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll): The House will probably agree that we have had a wide-ranging and agreeable debate on the many questions affecting the film industry—from the point of view both of film production and distribution and exhibition. In the course of my reply I shall try to answer the many points which have been raised, but I may find that shortage of time prevents me from doing justice to them all.

Mr. Rankin: The hon. Gentleman has plenty of time.

Mr. Erroll: It is almost thirty years since Parliament passed the first Cinematograph Films Act—in 1927—which established the first British film quota provisions. The House may care to recollect that this Bill was regarded at the time as highly controversial, and there were no less than 300 divisions during the Committee stage alone. Today's debate has


been in marked contrast to the atmosphere of thirty years ago. I think that the House is in general agreement with the need to maintain a prosperous and efficient film production industry, and that there has been a remarkable degree of support for the introduction of the statutory levy.
The purpose of the Bill is to support British film production. The support takes the form of a tripod, so to speak. There are three legs or forms of support, namely, the National Film Finance Corporation, the quota provisions and the exhibitors' levy. The stability of a tripod depends equally upon all three legs; remove one of them and the other two will collapse. The same may be said of this arrangement for supporting British film production.
The National Film Finance Corporation guarantees the end money without which few British producers could begin to make films today, and the quota provisions ensure that British films will have a reasonable share of the valuable screen time in British cinemas—again a necessary guarantee far British producers. But it is not enough to see that the films are made, or to guarantee their showing; they must be made to pay, and the levy completes the third leg of the tripod by helping to ensure this, and so enabling producers to repay their loans to the Corporation, thus making it possible for the Corporation, in turn, to guarantee fresh loans to the producers of yet more British films.
The hon. Member for Uxbridge (Mr. Beswick) referred to the fears of workers in the film industry. I am sure that now he will be able to reassure them that the support we are planning for British film production will ensure a steady output of British films; thus enabling exhibitors—especially the smaller ones—to have available a range of feature films from which they can select those most suitable for their local audiences in fulfilment of the quota provisions. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) stressed the importance of bearing in mind this local need which varies from locality to locality.
I wish now to turn to the first of three legs of the tripod, the National Film Finance Corporation. My right hon. Friend referred to the excellent work being done by the Corporation. I wish

to remind the House of what he said; that the Corporation has no intention of changing its policy. But we have thought it right nevertheless to insert Clauses 10 and 11 in the Bill requiring the Corporation if possible—and this is important—to balance its books and so to ensure that there is no element of hidden subsidy in its activities through it incurring in the course of its operations a number of irrecoverable losses. From what I have said the hon. Member for Flint, East (Mrs. White) will see that the Corporation will be able to go ahead and finance what she, quite rightly, described as adventurous production.
Some anxiety has been expressed over Clause 10 (1). It is suggested that the Corporation will be competing with the banks in what is their traditional line of business. I do not think there is any danger of this happening. We must remember that the Corporation borrows its money from the banks at the ruling rates of interest and then re-lends the money to the producers. By the time the Corporation has paid interest on the advances made to it from the Board of Trade and the banks there is not much scope for undercutting the banks. The National Film Finance Corporation will, of course, be free to continue to lend money in circumstances where the banks would not be willing to do this. Moreover this extra degree of freedom is surely a sensible step towards the Government's aim of putting the affairs of the industry on a truly commercial basis.
The hon. Member for Bradford, West (Mr. Tiley) and the hon. Member for Uxbridge referred to television films, or films produced for television viewing, and spoke of the relationship between television and the Corporation. Television films are technically eligible for support from the Corporation, but, of course, they are not entitled to any money under the levy unless they are shown in a British cinema just like any other film.

Mr. Beswick: I was of course aware of that. I was asking whether there was a possibility of contributing to production costs for television films in the same way as some contribution is being made to the production costs of cinema films. Television films are as important to the economy of the country as are the films shown in cinemas.

Mr. Erroll: I am aware of that point, and I am sure that the Corporation, in exercising its freedom, will take into account the commercial attraction or otherwise of television films.
The hon. Member for Ardwick referred to the holding of shares and scrip by the Corporation—

Mr. H. Lever: The hon. Member for Ardwick (Mr. L. M. Lever), who is very well known to me—in fact he is a close relation of mine—has not been present during the debate, and I think that the Minister should be informed of this.

Mr. Erroll: No one could be more apologetic than I in a matter of this sort. I meant the hon. Member for Cheetham (Mr. H. Lever). I apologise to the hon. Member for Ardwick (Mr. L. M. Lever) for having referred to him in his absence and to the hon. Member for Cheetham for having failed correctly to describe his constituency.
The position is that the Corporation hold the shares of British Lion Films Limited as the result of an arrangement made within the terms of the Cinematograph Film Production (Special Loans) Act, 1954. A statement explaining the details of this arrangement was printed and laid before the House in 1955. Clause 11 in the present Bill does not in any way render the 1954 Act unnecessary. That Act restricted the powers of the Corporation to accept shares or debentures in repayment of loans, to cases in which without such special action, harmful consequences to the production of films would ensue. There are unlikely to be many instances of this sort. I understand that the British Lion case was the only one.
I now turn to another important matter concerning the Corporation, to the point raised by the hon. Lady the Member for Flint, East and the right hon. Member for Battersea, North (Mr. Jay) in his winding-up speech, namely, what is to happen after 8th March. The National Film Finance Corporation does not cease as a legal entity on 8th March. It has many loans to collect and functions to perform, but it will cease for a short time to have the power to make loans, in fact until Parliament has passed this Bill.
Let us be frank about it. It is an embarrassment that the Corporation will

not be able, for a period, to make loans, but for some time the Corporation has been aware that it might find itself in this position and it is taking whatever steps are possible to ensure that the least inconvenience is caused to film producers. No doubt film producers who have known that they will need money from the Corporation have taken pains to approach the Corporation rather earlier than they otherwise would have done so that legal arrangements can be made and money advanced before the lapse of the Corporation's loan-making powers.
This is not a happy position; it is a position of slight difficulty. Obviously, the longer the time taken in the passage of the Bill, the greater will be the difficulty which producers will face. [HON. MEMBERS: "Oh."] That is why I referred in my opening remarks to the agreeable atmosphere of this debate in the hope that we would not have 300 Divisions on the later stages. I hope, naturally, that hon. Members will assist in the passing of the remaining stages of the Bill, particularly as so much agreement has been demonstrated during the debate.

Mrs. White: I must take the hon. Gentleman up on this matter. It is not the fault of the Opposition that the Government have mismanaged their timetable. My hon. and right hon. Friends recognise no obligation whatsoever to take the remaining stages of the Bill any more rapidly than seems to us desirable in the public interest. If the hon. Gentleman hopes that no Amendment may be put down, let me assure him that we already have in draft a very large number of Amendments.

Mr. Erroll: I am neither blaming the Opposition nor trying to put them under any obligation at all. I was trying to be frank with the House and to explain the situation. I should be very surprised if hon. Gentlemen opposite had no Amendments. There should be some, and we hope to debate them in as amicable a way as we have debated the Second Reading.

Mr. Jay: Some of my hon. Friends would like to know why this explanation of the position of the Corporation could not have been given in the opening speech.

Mr. Erroll: Because my right hon. Friend, recognising the difficulties which beset Parliamentary Secretaries in making winding up speeches, very kindly left me some material. [HON. MEMBERS: "Oh."]
Hon. Members on both sides have referred to the desirability of making Amendments to the quota provisions. It would have been fortunate if Amendments could have been agreed upon in time for inclusion in the Bill, but owing to lack of time, because of the necessity of getting on with the Bill—[HON. MEMBERS: "Oh."]—from the point of view of the National Film Finance Corporation, it was thought better to renew the quota provisions as they stand by taking advantage of the passage of the Bill, rather than to leave producers without the security which they will now have, namely, that the quota provisions are to continue for a further ten years. If we had done nothing, producers would merely know that the provisions would continue for another eighteen months. It is better for them to know that the provisions will continue for a further ten years than that they will continue only for eighteen months.

Mrs. White: Why is it necessary to put in ten years for this purpose? Even allowing for the laggardly way in which the Government have dealt with this legislation, if they had allowed this to have an extra twelve months that would have been sufficient, would it not?

Mr. Erroll: It is more satisfactory for producers to know that they are likely to have the advantage of the quota provisions for a period of ten years written into a Bill, than to know it is only for a period of twelve months and to be left wondering what is to happen after that. At the same time, we do realise that some amendments are necessary, and as my hon. and gallant Friend the Member for Barkston Ash said, we have undertaken to discuss the whole question of amendments with all sections of the industry in this coming autumn. [HON. MEMBERS: "Why in the autumn?"] That is the time when it is convenient for everybody to discuss the matter, after they have had the opportunity to think out all the different aspects of this extremely complicated matter.
Reference has also been made to what constitutes a British film. This is a matter which has been exactly defined, of course, in the Cinematograph Films Acts of 1938 and 1948. The hon. Member for Uxbridge and the hon. Member for Newcastle-under-Lyme (Mr. Swingler) both referred to this matter. Let me admit at once that the definition—I will not quote it; it is already in the Act—allows films featuring foreign nationals and films made wholly by Commonwealth subjects to participate in the protective Measures provided by the quota.
I come now to the question of whether a British quota film could be made in Jamaica by an American company with American stars. The short answer to that is "No". A British film must be made by a British company. [HON. MEMBERS: "No."] Although there is provision for utilising American talent, the vast bulk of the labour must be British.

Mr. Jay: A company registered in Jamaica which was a subsidiary of an American film company would qualify?

Mr. Erroll: I think it would qualify, but I would like to check that point before I reply exactly.

Mr. Ede: What is the difference between talent and labour in this industry?

Mr. Erroll: My right hon. Friend and I are in a position much the same as hon. and right hon. Members on the benches opposite.

Mr. Rankin: Do not become provocative.

Mr. Erroll: It is quite against my nature to become provocative. I want to maintain the peaceful atmosphere of the debate if I can, but I am having difficulties.

Mr. Beswick: The hon. Gentleman has again given us information which we already knew. We knew of the definition in the previous Acts, and what we were complaining about was that it was an unsatisfactory definition. We are asking him what the Government are going to do to tighten up the definition and bring it more into accordance with something really British.

Mr. Erroll: What we want to do is to have the consultations and give everybody sufficient time to think out their proposals fully before bringing them to us for examination.
Films produced in collaboration with foreign subjects are mainly made with American finance, directors and stars. The American finance comes usually from the blocked sterling accumulating in this country from the earnings of American films shown here. The use of this blocked sterling for the production of films qualifying as British quota films has been an important factor in the development of the British film production industry, and one which has proved of considerable value to our producers, directors, actors and technicians.
The right hon. Member for Battersea, North, and my hon. Friend the Member for Cheadle (Mr. Shepherd) support us in our view that these Anglo-American films should get the benefits of the British quota provisions and the corresponding benefits of the statutory levy. That was my understanding of the remarks of the right hon. Member for Battersea, North, but if I have overstated his case—I see that he wishes to qualify his support. The fact is that these films are British films within the definition of a British quota film. They are made by British firms in British studios, as defined. They carry not less than the minimum proportion of British labour costs and they observe the other requirements. I see no reason therefore why such films should be excluded on the grounds that they are Anglo-American films and therefore financed out of the blocked sterling earnings of American films. They represent a useful employment of British resources with funds which otherwise would in all probability have had to be converted back into dollars.
The hon. Member for Cheetham and others have referred to the foreign personnel—which perhaps is a better word to use than labour or talent—used for these Anglo-American films. Here it must be remembered that the cost of one foreigner may be excluded from the calculations provided that 75 per cent. of the remaining labour costs are in respect of British Commonwealth subjects, or the cost of two foreigners can be excluded provided 80 per cent. of the remaining labour costs relate to British Common-

wealth subjects. This is a subject which lends itself to a great deal of detailed study.
Perhaps I might turn to the agency, which has been discussed by hon. Members on both sides of the House.

Mr. H. Lever: Before the hon. Gentleman deals with the other leg of the tripod, may I point out that on every occasion when these makeshifts have been before the House we have been promised a permanent policy in future. Out of respect for the precedent established on the last four occasions, will the hon. Gentleman give us lip-service to a similar kind of promise for a permanent policy? We shall not take his promise too seriously, but, if he does not give it, by 1972 the precedent will have been lost and no policy will be promised in 1972 either.

Mr. Erroll: Obviously the hon. Member does not expect very much from me—

Mr. Lever: Only a promise.

Mr. Erroll: —so I shall not weary the House with any attempt to go further. This Bill stands on its own three feet, and its duration and the duration of each leg are as shown in the Bill. That ought to be sufficient for one evening for the hon. Member for Cheetham.
The levy will be collected by the Commissioners of Customs and Excise, who are already responsible for the collection of Entertainments Duty. It was they who formerly collected no less than 96 per cent. of the voluntary levy. The amount raised will be passed to the British Film Fund Agency, which will make payments to producers in accordance with regulations to be drawn up by the Board of Trade. The hon. Lady the Member for Flint, East and my hon. and gallant Friend the Member for Barkston Ash were concerned about the composition of the Agency. The Agency will be composed of members with no connection with films, and it has been said that they will not know enough about the trade. It has been suggested that the Agency should be advised by an advisory body drawn from the trade. Some have even suggested that members of the Agency should themselves be drawn from the different sections of the film industry.
I think that attitude possibly derives from a misconception as to the task of the Agency. The Agency is not a policy-making body; it is rather in the nature of a trust to administer the fund in accordance with the regulations which will be made under the Act. A task of this sort, involving as it does responsibility for paying out nearly £4 million a year, calls for men of high standing with legal and accounting experience rather than for a number of trade representatives who to some extent must be interested parties.
It may help to resolve some doubts which have been expressed if I now turn to the arrangements we expect to make after the Bill reaches the Statute Book. In the first place, I am glad to be able to inform the House that Sir Richard Yeabsley has consented to become the first chairman of the Agency. As hon. Members will know, he is an eminent accountant who is a member of the Council of the British Institute of Management and he is Accountant Advisor to the Board of Trade. He has told me that he has it in mind, provided suitable arrangements can be made, for the Agency to use the services of the firm of accountants which has so successfully carried out the detailed arrangements for paying producers the moneys calculated under the present arrangements for the voluntary levy.
It is because we can draw upon the services of accountants already skilled in this field that we are not proposing to do the work ourselves at the Board of Trade. The Agency will be small in number, and there is no question of building up a large staff or having a large building, such as was suggested by my hon. Friend the Member for Bradford, West. I can assure the House that the chairman designate will be most willing to receive advice from the industry, and he has asked me to let it be known that it is his intention to consult the industry freely whenever it appears desirable to do so.
The hon. Member for Uxbridge and the hon. Lady the Member for Flint, East asked about the regulations. They suggested that this was only an enabling Bill and that not enough was being told the House. For the most part, the regulations will be subject to affirmative procedure. That is to say, they will be laid before the House in draft so that hon.

Members interested can study them; they can be debated if necessary, or if it is wished, and they can, in the last resort, be voted upon. Therefore, while this is, in a sense, an enabling Bill, hon. Members will have full scope and opportunity for scrutinising detailed subordinate legislation made under the Act.
As to the framing of the regulations, an Amendment was introduced in another place which requires the Board of Trade to consult with the Cinematograph Films Council before regulations are tabled, and as the hon. Lady is herself a member of that Council she will be able to keep an eye on the framing of them, and we do look forward to her co-operation and assistance in this matter.
The hon. Lady also mentioned the risk of some films obtaining an unfairly large share of the levy as a result of manipulating the rentals. This will be dealt with in the regulations to be made under Clause 3. The hon. Lady and my hon. Friend the Member for Cheadle both raised points relating to what are called second feature films. The advice which the Board of Trade has received about the share of the levy which would be appropriate to these films has been conflicting. Some think, as does the hon. Lady, that, like the short films, second feature films should have more than their proportionate share of the proceeds of the levy. Others take the opposite view.
We must remember that these films do not, perhaps, bring quite the same prestige to the United Kingdom as do first feature films or shorts. Moreover, there seems to be a slightly lessening public demand for them. Perhaps, therefore, it is better to leave this issue to the operation of the economic forces within the trade. If exhibitors think that patrons want these films, they must pay a little more for them. It is the intention of the Government to adhere as nearly as possible to the present voluntary arrangements, which have worked well and which received the assent of the industry, and not to give a specially favourable share of the levy to producers of second feature films.

Mrs. White: I presume that nothing that the Parliamentary Secretary now says precludes the Cinematograph Films Council from offering advice in a contrary


sense? Regulations have not yet been formulated, and if the Council were consulted it might possibly wish to advise in a contrary sense.

Mr. Erroll: I think that we would listen to the Council's advice most carefully, and see whether or not it carried conviction.
A number of hon. Members, and, indeed, members of the public have stated their doubts about a compulsory levy. It was particularly helpful, therefore, to get the reassurances of my hon. Friends the Members for Bradford, West, for Southampton, Test (Mr. J. Howard) and for Cheadle. We have not lightly proposed a compulsory or statutory levy. The Board of Trade was, however, faced with the problem that the future of the voluntary levy was threatened by exhibitors, who indicated that they would not be prepared to pay it in future. If this threat had materialised, the consequences would have been very serious for British film production. The House is agreed that British film production should be maintained, and there is, therefore, no alternative but to make the levy statutory and thus provide the necessary assurance to producers about their future finance and, at the same time, remove the levy itself from the arena of argument and counter-claim.

Mr. Rankin: Before the hon. Gentleman leaves that point, may I raise the issue of the promise that was made to the industry that the tax and the levy would go together, that they would marry? The President of the Board of Trade indicated something about the tax. Is the Parliamentary Secretary going to deal with that aspect, because the idea is now widespread—in fact, I have had phone messages from Scotland asking if it is the case—that the President of the Board of Trade in the House of Commons tonight promised that the Entertainments Duty would be reduced?

Mr. Erroll: I only hope that the hon. Gentleman's many callers did not reverse the charges.

Mr. Rankin: They did reverse the charges.

Mr. Erroll: They doubtlessly thought that in this House we all get our phone calls free. My right hon. Friend rose

during the speech of the right hon. Gentleman the Member for Battersea, North (Mr. Jay) to amplify the point which he made, and I do not think that any useful purpose would be served by my saying any more than my right hon. Friend has himself already said on this subject.
The levy will provide British film producers with some of the money they require, but if they are to achieve the prosperity of which we believe they are capable, they will have to secure a large foreign market. The domestic market alone is not large enough in itself to support an efficient and flourishing production industry. Given the assistance of this Bill, we have a right to expect producers to show particular enterprise in foreign markets. Here I should like to refer to the speech of my hon. Friend the Member for Watford (Mr. Farey-Jones), who referred particularly to the Free Trade Area implications for film production. All that I can say at present is that we are sympathetic to the concept of film production throughout the Free Trade Area and of products moving freely, but it obviously would not be possible for me to go into details at the present time.
Several hon. Members referred to the size of the levy, and I would suggest that, as I have been on my feet for some time, discussion of this could best be left to the Committee stage.
The hon. Lady the Member for Flint, East wanted to know what would happen if the required amount is not realised. I will try to cover that point briefly, because it would—let us be frank—be surprising indeed if officials were able to prescribe the rate of levy which would produce the precise sum of £3¾ million, but, after making due allowance for falling attendances and estimating whether it will be a wet or dry summer, we hope to get fairly close to our target. If we are not so fortunate and are rather on one side or the other, it will not represent a disaster because we shall be able to do something to rectify the over or under calculation, as the case may be, in the following year. We have now, of course, had experience of the estimating carried out under the voluntary levy and we think that we should be able in future to get fairly near the mark.

Mr. Beswick: Is the Parliamentary Secretary saying that the Agency would carry some float or some reserve fund? Is that what he means?

Mr. Erroll: There is obviously an overlapping from one year to another in a matter of this sort where one cannot estimate with absolute precision.
Although, as I said, this is a Bill to assist film producers, it is understandable that many speeches should have referred to the difficulties affecting distributors, both large and small. I do not propose to discuss those difficulties tonight, but I would remind the House that although the industry is having its difficulties, it is still a very large and important industry in the country. As my hon. Friend the Member for Cheadle said, we must not be too dispirited about it. In 1954, attendances amounted to 1,276 million and in 1956 to about 1,100 million, which is still a very large figure indeed.
The Bill, by providing a threefold measure of support for some years ahead, should promote a steady and possibly increasing flow of good films from British studios. Although some exhibitors are hard pressed just now, they can, I think, face the future with reasonable confidence, knowing that they will have a wide selection of films to choose from.

Mr. H. Lever: And a reduction in the Entertainments Duty.

Mr. Erroll: We all want to see a healthy cinema industry in the country providing entertainment to the public on a nation-wide scale. For this reason, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).

CINEMATOGRAPH FILMS [MONEY]

Considered in Committee under Standing Order No. 84 (Money Committees).—[Queen's Recommendation signified.]

[Sir CHARLES MACANDREW in the Chair]

Resolved,
That, for the purposes of any Act of the present Session to provide for the imposition of a levy on exhibitors of cinematograph films and for the making from the proceeds thereof of payments to, or for the benefit of, makers of British cinematograph films and to the Children's Film Foundation Limited, it is expedient to authorize—

(a) the payment, out of moneys provided by Parliament, of—

(i) the expenses incurred by the Commissioners of Customs and Excise in collecting the said levy; and
(ii) any sums required by the Board of Trade to enable them to lend to the British Film Fund Agency established by the said Act sums necessary to enable the Agency to discharge their functions between the date of their establishment and the time when they have received, by way of payments in respect of the said levy, such sum as, in the opinion of the Board, will be sufficient to enable them to discharge their functions without financial assistance from the Board;
(b) the payment into the Exchequer of any sum retained by the said Commissioners out of the proceeds of the said levy and of any sum received by the Board of Trade by way of repayment of, or payment of interest on, loans made by the Board to the Agency;
(c) any increase in the sums which, under the Cinematograph Film Production (Special Loans) Act, 1949, are to be, or may be, issued out of the Consolidated Fund, raised by borrowing or paid into the Exchequer, being an increase attributable to provisions of the said Act of the present Session extending by ten years the period during which the Board of Trade are empowered under the said Act of 1949 to make advances to the National Film Finance Corporation.—[Mr. Erroll.]

Resolution to be reported Tomorrow.

CUSTOMS DUTIES (DUMPING AND SUBSIDIES) BILL

Order for Third Reading read.

9.3 p.m.

The Minister of State, Board of Trade (Mr. Derek Walker-Smith): I beg to move, That the Bill be now read the Third time.
I think I can claim that the progress of the Bill through its various stages in debate in this House has shown general agreement that it is right that the Government should have power to deal with dumping and subsidies. When I say "general agreement", I suppose that in all honesty I should make an exception for the Liberal Party which, from time to time, seems to manifest some misgivings about this generally accepted principle. But I observe that tonight, with characteristic delicacy of feeling, Members of the Liberal Party have absented themselves so as not to derogate in any way from the general unanimity of our view.
We on this side of the House have sought to profit by the discussions which we have had on the Bill, and I think that the House will be at one with me when I say that we have succeeded in incorporating to a large extent recommendations and suggestions made from all quarters of the House. The debates have, in fact, confirmed that such disagreement as is left is more as to method than as to the objectives which we have in mind.
The Bill has an important and a useful purpose, but it is, of course, a limited purpose; it seeks to deal simply with imports which are the subject of subsidy or which are dumped and which inflict injury or threaten material injury on one or other of our industries or on an industry of a third G.A.T.T. country.

Mr. W. R. Williams: Would the Minister care to repeat the first part of his speech for the edification of the hon. Gentleman the Member for Bolton, West (Mr. Holt)?

Mr. Walker-Smith: Observing the absence of the hon. Member for Bolton, West (Mr. Holt), I attributed it to his characteristic delicacy of feeling in not wishing to derogate from our general

unanimity in these proceedings. I now add only this, that his appearance here is evidence of the characteristic consideration towards the House which he always displays.
The Bill has that limited though valuable purpose, and it does not, of course, seek to deal with the problem of low-cost competition, which is part of a more general problem.
In taking these powers, we have done so primarily as a precautionary measure, because we have not at present got any clear evidence that dumped or subsidised imports are, in fact, causing a material injury to our industries. We have, of course, to look at the powers we have taken for this limited purpose in the wider context of our general economic position.
We are, first and foremost, as the House will agree, a great exporting nation. Dependence upon exports is for us a continuing and inherent characteristic of our economy. That being so, our approach to the Bill has been that we do not wish to invite reprisals or excessively stringent provisions in the laws of other countries by anything which we do in this Bill. We have modelled our Bill closely upon Article VI of G.A.T.T.; but we have, nevertheless, left ourselves sufficient flexibility for the purposes of our own domestic law and also to be able, if need be, to deal more severely with the countries with whom we do not enjoy a full G.A.T.T. relationship.
Our intention is to make sparing and careful use of these new powers, resorting to them only when it is clear that dumping or subsidising is really threatening or doing harm to our industries, because to impose additional duties without a thorough investigation of their need would have the danger of inviting reprisals in the context of which I spoke.
One of the main matters which has occupied the attention of the House during the proceedings on this Bill is, of course, the question of its effectiveness. It is not altogether easy to make provisions of this kind fully and clearly effective; but I am satisfied that we have in the end evolved a flexible and effective instrument for this purpose. We have tried to learn from experience and have made the provisions of the Bill less rigid than those of the Safeguarding of Industries Act, 1921. By providing alternative


criteria such as we now have in this Bill, we have got a good workable basis for action.
I should, I think, say just a word about getting the necessary information. This has, perhaps, been the principal difficulty about which anxiety was expressed in the earlier stages of the passage of the Bill. It is true that some industries fear that, even though they may be harmed by dumping or subsidising, they will not be able to prove their case in accordance with the specified criteria of the Bill.
I certainly do not want to disguise the fact that there are practical difficulties in the way; but those difficulties, of course, are inherent in the nature of the case, because most of the things of which proof is required are things which happen outside our jurisdiction. That is the inherent and, to some extent, inescapable nature of the basic difficulty which arises. We have done our best to get a workable solution.
I see the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes) in his place, so I will say a word about the position of the Customs in this context. I observe that during the Report stage, on 21st February, he said:
The Customs and Excise know it on every single transaction now. All we are asking is that the Customs and Excise should tell the Board of Trade. If that is done, we shall be perfectly happy."—[OFFICIAL REPORT, 21st February, 1957; Vol. 380, c. 710.]
Always, one of my aspirations is to try to make the hon. Gentleman as happy as I can, so I should like to tell him quite clearly that the Board of Trade will have the full co-operation of the Customs in this matter as an administrative procedure.
As part of the ordinary administrative procedure the Board will have access to the statistics which the Customs have; but I ought, in fairness, to make this distinction. There is a distinction between export price and fair market price. The Customs statistics will be sufficient to show the export price, but the Customs naturally do not have the statistics which will give the fair market price. There we have the provisions of Clause 7, which, we think, should be adequate.
The other matter which exercised hon. Members to some extent was that of speed. They wanted to be assured that the remedies given by the Bill were not only effective but were sufficiently speedy.

It is, of course, true that there may be a conflict between speed of operation and thoroughness of investigation. In that case, I think that our bias must, in the ordinary way, be in favour of thoroughness, for two reasons: first, of course, in the general context of our trading position as a great exporting nation with G.A.T.T. obligations, and so on; and, secondly, because of the natural fairness of the case, which means one would not want to take action upon a matter unless it had been investigated.

Mr. H. Rhodes: Towards the closing stages of our debate last week the Minister said that if the proposals we made for investigation were put into operation the importers would have a chance to forestall them and to bring enormous quantities of the commodity into the country. Is that not what he is giving them a chance to do now?

Mr. Walker-Smith: No, I do not think so. Of course, there are some cases where it will be possible to act more speedily than in the average case.
I have referred before to the sort of cases where there is seasonal recurrence or where there is some previous experience which goes part way to establish a prima facie case. In such cases as those, where we have got a prima facie case of dumping or subsidies, where we have evidence of injury, we can and will act both speedily and decisively; but in the ordinary way, of course, industry must present the case as fairly and convincingly as it can, and we cannot be expected to act on suspicion, which would be wrong and invite reprisal. I believe that we have achieved the highest common factor of effectiveness, speed and fairness in the provisions as we now have them.
I summarise the matter in these words. These proposals fill a gap in our economic armoury. We have, I think, devised a weapon which is effective for its purpose and appropriate in the general context of our economic life, and as such I commend it with confidence to the judgment of the House.

9.14 p.m.

Mr. Gordon Walker: The right hon. and learned Gentleman should not overrate the degree of unanimity about the Bill. We do not like it as much as all that. I agree with him, however,


that the Bill has been somewhat improved as a result of the consideration that we have given to it.
The main change, I think, is the proviso to Clause 1 (1), about material damage. The President of the Board of Trade, on Report, said that this was a very pretty piece of drafting. I have since looked at it very carefully in the light of what he said. I am not sure that I agree with him, and I ask the Government for an assurance that this new proviso really does extend to material damage to industries in Commonwealth countries.
We were told by the President of the Board of Trade that it did, but it is so prettily drafted that this particular effect of the proviso escapes me. I tried very hard to read it into it. The Minister of State chided us art an earlier stage for not providing against material damage to Commonwealth industries. I only hope that he and his right hon. Friends have succeeded in making the provision. It would be good if we were to have a firm and clear assurance that that is one of the effects of the proviso.
In general, the extension of the definition of dumping to include material damage at any rate in relation to other G.A.T.T. Powers, is good. This, of course, is a further limitation of the Bill. Some hon. Members opposite, among them the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) seemed to think that it extended the scope of the Bill. It limits it, of course, because it adds one more definition to a number of other definitions which remain just as effective as they were. This is right because, although we must stop dumping, it is important that the Bill does not become a protectionist Measure. I agree about the need for us to give high priority to export and to the interest of exporters in this country. I agree that where we must strike a balance of advantage we must always lean heavily towards the interest of exports.
The other improvement made was also in Clause 1 (3)—the extension of 'the definition of a subsidy on an export. That is clearly necessary. It meets the worst sort of dumping, a sort of surreptitious and devious aid by Governments. The definition may become more necessary if the French colonies are brought into the Free

Trade Area. This may extend the forms in which devious and subterranean subsidies are made by Governments to their own exporters. It is also a useful improvement that there is to be an annual report on the Bill when it comes to be operated as an Act.
All these improvements were due to this side of the House. It is true that we had the co-operation of the hon. Member for Kidderminster (Mr. Nabarro) in one, although we had thought of it on our own, as we have always done when the hon. Member has a good idea. Nevertheless, the Bill is, in our view, rather defective. It has very little real force. It is rather like relying for the protection of one's property on a watchdog with a big bark and a set of false teeth. There is not very much real strength and force in the Bill.
This is particularly the case with Clauses 5 and 8. There is still, under Clause 5, no means by which the real facts can be found out. The right hon. and learned Gentleman made a further defence of that Clause in his speech tonight, but the truth is that it is not good enough for the Board of Trade just to be an agent for industries which are themselves incapable of finding out the facts that alone can set the Bill into operation. The right hon. and learned Gentleman said that most of the facts that it is necessary to discover are outside our jurisdiction. That is all the more reason why we need a powerful agency like the Board of Trade or the Customs to discover the facts. It makes nonsense of the Bill to set out a great many facts which must be established before it is in operation and then to say that they must be discovered by people who are incapable of discovering them. That is what Clause 5 says.
We are very worried still about Clause 8, which deals with the countries of origin. It leaves a considerable loophole in the Bill, because it allows indirect dumping or dumping at one remove. It will be possible for country A to send subsidised goods to country B which then adds 25 per cent. to their value and exports them to us, and they are no longer dumped, according to the terms of the Bill, when they reach us.
This is really a very grave loophole, and it would be particularly dangerous if the Free Trade Area was in operation, a


great area in which there are no tariffs and no impediments to trade and in which a country can get its raw materials or semi-processed goods at dumped prices and send them to us with very small additions to their value so that they can no longer be described as dumped goods.
Despite defects of this sort in the Bill, the Measure has some force, and we hope the Government will be ready in appropriate cases to use it, and use it quickly. Readiness to use the powers contained in it will reduce the need to use them very often. There must be a bit of a bite in the bark if the watchdog is to be of value. If importers think that the Bill will never be used, we might as well not have wasted our time on it. If it is used with vigour where necessary, I hope that it will not have to be used very often.
There is a real danger as long as the United States has huge surplus stocks which it wants to clear on terms and conditions which would amount to dumping as envisaged by the Bill, which means selling them at prices lower than they command in their home market. This danger of dumping hangs over us all the time. If America unloads those surplus stocks in the form of dumping, it can do great damage not only to British agriculture but to our British industries, because they will have to compete in the home market with imported goods which may have been made with dumped American material, and throughout the world with goods made with, for instance, cheap American cotton.
There is also constant danger that our trade with Australia, in particular, can be seriously interfered with by the dumping of Argentine meat or French wheat. Things of this sort ought to be dealt with very quickly when the Bill becomes an Act, in the interests of the proper flow of Commonwealth trade.
We are not very happy about the Bill. We think that a good deal of it is window-dressing and will not be really effective. It is a very elaborate and ingenious mountain which has produced a very diminutive mouse at the end of the operation. None the less, it is better than nothing, and we are prepared to allow it to pass with faint praise and a very half-hearted blessing.

9.23 p.m.

Mr. Peter Remnant: I am sorry that the right hon. Member for Smethwick (Mr. Gordon Walker)

should have coupled with such faint praise his willingness to give the Bill a fair wind. I do not in any way wish to deprive him of the opportunity of taking credit, if he wishes to do so, for certain alterations in the Bill, but he and his right hon. Friends are not the only ones who have taken exception to some of its provisions.
I should like to have seen rather more "teeth" in the information to be supplied to my right hon. Friend the President of the Board of Trade. I would remind him that those of us who hold that view rely on his assurance, given at an earlier stage, that if the occasion arises he will act quickly and that, if a strong case is made, he will take action before all the facts of the case happen to have been proved.
Though this may be a rather longer Bill than some of us might have wished, I believe it to be a deterrent, and a very necessary one. Even if it might have been put on the advertisement boards rather more obviously than it has been, it will, if it acts as a deterrent without my right hon. Friend having to act, have achieved the objective which we all seek. I therefore lend my support to the Bill, and, relying on the assurance that we have been given by the Minister, I wish it good luck.

9.25 p.m.

Mr. Arthur Holt: The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) is not very happy about the Bill because he thinks that it is window-dressing. I must say that if I could think it was window-dressing I should be very happy indeed.

Mr. Gordon Walker: Cheer up.

Mr. Holt: I do not propose to let it get me down. I came with the intention tonight of delivering a last broadside against the Bill, but I am afraid that the very courteous opening remarks of the Minister of State rather spiked my guns. I should like to be able to offer equal courtesy in return.
The right hon. and learned Gentleman said that it was the intention of the Government to use these powers sparingly. His actual phrase was: "Sparing and careful use of these powers." If that is so, well and good. It may be that on the whole the Bill will serve a useful purpose, but some of the right hon. and


learned Gentleman's hon. Friends, who on previous occasions have been shooting at him from the flank, certainly do not want him to use these powers sparingly. Neither do they want always a very thorough investigation before they are used. Speed was the essence of their case, and they would really like some of these powers used at the least suspicion, certainly not only after prolonged and careful investigation.

Mr. Remnant: It would be too late.

Mr. Holt: The hon. Members says it would be too late, and I agree that there is a practical difficulty. I quite accept that in some perfectly good case, if the work is not done speedily, the point of the whole thing is missed, but at the same time, as has already been said, we have to remember the great interests this country has in looking after its exporters. If we indulge in too frequent use of these powers, they will undoubtedly react against us in export markets.
I retract nothing I have said about the Bill during its previous stages, but I do not relish the rôle of a Parliamentary King Canute. I will accept what has been done and do what little I can to see that these powers are used sparingly and carefully and bring it to the attention of the House whenever they are not.

9.28 p.m.

Mr. H. Rhodes: I should not like to predict that when it becomes an Act the Bill will never be used, but we can safely predict that it will not be very effective when it is used. There have been comments tonight about the teeth of the dog. The President of the Board of Trade, when speaking on Second Reading, said that he was approaching the House in the hope that he could put up a notice to say, "Beware of the dog. He bites dumpers and subsidisers." But with what is the dog to bite dumpers and subsidisers?
I remember a Lancashire cotton operative who, during the time of a serious round of dumping in the years before the war, was seen in the village without his top teeth. His friends asked him what he had done with them and he said, "I have pawned them because I have nothing for them to do." I hope that the same argument can be advanced for the Bill.
Although it came at rather a late stage, it was interesting to hear the Minister's news that the collaboration of the Customs and Excise had been secured in the matter of providing information as and when it was necessary. That is only part of our grievance. As the Bill stands, an aggrieved industry or firm must put up its own case. It must get the information from somewhere. If it is a very large organisation and is able to employ snoopers overseas, it can probably get the fair market price in the country of origin, but it certainly cannot get the export price. If that can be furnished when a prima facie case has been made out it will be of assistance.
But it does not help the industrialists or industry in making a case. The only people who know are the Customs and Excise authorities and the importers, and the importers will certainly not give that information. The Minister referred to the way in which an order would be made, but I should like the procedure to be explained again for the benefit of some of us. The Minister dotted one or two i's and crossed one or two t's of the information that had gone before, but I should like to have the matter quite clear.
In the Second Reading debate the President said:
I should add that the Board could take the initiative itself under this Bill. I doubt if it would do it very often, but it could. However the process was started, the Board would urgently consider whether a prima facie case had been made out. Once we were satisfied that there was such a case we could either proceed to a detailed examination"—
which was the alternative the hon. Member was talking about—
or in the exceptional case, where it was perfectly clear that serious damage was being done, lay an Order at once, subject to an affirmative Resolution of this House, imposing a duty."—[OFFICIAL REPORT, 22nd January, 1957; Vol. 563, c. 61–62.]
and so on. When the Minister of State replied to the debate he said:
It would then be for the Board of Trade to decide, first, whether a prima facie case of dumping had been established, and, secondly, whether there was any evidence of material injury, which, as I have explained, would in the case of G.A.T.T. countries, still be relevant. If the answer was that there was no prima facie case or no material injury, the matter would lapse. On the other hand, if a prima fade case were established, there would then probably be some procedure for the advertising of the application with a view to giving other interested parties the right of objection before


the Board of Trade made up its mind whether there was a case for an Order."—[OFFICIAL REPORT, 22nd January, 1957; Vol. 563, c. 120–21.]
There is no reference there to acting quickly or getting on with the job of stopping this unfair dumping.
There would be a real chance for importers to forestall action upon any order made, by getting into the country as quickly as possible as many as possible of the goods of that description. If the Bill is to be effective it must be applied quickly. Very often, when these procedures are applied quickly, an assessment has to be made, and it can be a rough assessment.
I do not see how it can possibly be anything else. Up to now there has been no indication given to the House as to how we are to obtain meticulous information about this. It may be that the Minister relies on Clause 7 for the furnishing of information on production costs. Mention was made in a previous debate that declarations would be required from the exporter from another country who would declare what was production costs. But that is far more involved than the Minister may realise.
It is a tremendous job to find out what are the production costs in a foreign country. In that case, as I see it, there be an attempt at an assessment of the amount of dumping in any particular transaction or series of transactions. The Board of Trade will assess it on the high side. It cannot assess it correctly and it will not assess it low. The result will be that we shall have an enormous number of reclaim forms coming in backed by data of all kinds, in metres, centimetres, kilograms and grammes and the discrepancies in foreign currencies.
Samples will come in and we shall have examples of the type of thing that traders do when they are in danger of losing some money. The question of trade discounts and details of construction will be raised, and the rest of it. When that has been exploited to the full, in all probability they will attack the legitimacy of the reclaim procedure, because I have not heard it explained yet how this fits into the scheme that we know as G.A.T.T. If it was thought that it did not fit we should have all the commercial consuls from all the countries importing into the United Kingdom, lining

up for information about why their nationals were experiencing a delay.
It may not be in the mind of the Minister, although perhaps he has heard of it, that there was an inquiry in 1955 under the G.A.T.T. organisation into the working of a tariff in Sweden. I think the item was something to do with nylon stockings. It was found that on this system of reclaims that we have in Clause 3 there was a delay of seven months, and a tremendous lot of grumbling went on.
We do not think that adequate powers have been taken in this Bill by the Board of Trade. During the Second Reading debate the President said that the Bill would be similar to legislation in the Commonwealth countries and the United States, but that is not strictly correct. This is not so good a Bill. The powers are not very similar to the ones which the Americans have. Not only do the Americans demand that there should be a declaration—which is what we wanted, but that has now gone by the board—but they also demand that the exporter shall put in the home market price in the country of origin.
I wish to say a word on the question of dumping through an intermediary country with intermediate products. It was mentioned by my right hon. Friend the Member for Smethwick (Mr. Gordon Walker). Twice in his Second Reading speech the President of the Board of Trade mentioned the dangers of dumping from totalitarian countries and Socialist countries, which had monopolistic systems. He spoke of the danger to the economy of other peoples from that kind of trading. It was precisely to help the President of the Board of Trade that we put down an Amendment to Clause 8. It was not accepted, but even now I think it would have been a good thing to put it in.
In the case of totalitarian countries, there is no difficulty whatever in dumping here or in any other country in the Free Trade Area. Totalitarian countries can make their own home market price. They can send the goods to an intermediate country and get a little processing done on them. We are only allowing them 25 per cent., and we could have a commodity coming in here which really, from the point of view of the totalitarian country which sends it, has no home price, whereas over here it can shatter an industry which has


perhaps been struggling along for many years and which at that particular time is in difficulties.
We shall not divide on the Bill although there are still points on which we are not satisfied. I can assure the hon. Gentleman that we shall watch what the countries on the Continent will do about their anti-dumping legislation. The Bill is precipitate and too early. What is the use of saying, "We hope that nobody else on the Continent will do anything different, when, as we are the first, they can make this Measure their model and get as near to the provisions of G.A.T.T. as they are able? We shall watch it with interest and hope at some time or another to amend the Bill if Continental legislation is more severe than ours.

9.43 p.m.

Mr. Ronald Williams: In spite of the good will that we have shown through all the stages of the Bill it is very difficult, as I think the Minister will agree, logically to advance any argument in support of it. We do not feel so antagonistic to it that we would divide on it, but I find it extremely difficult to reconcile myself to the Bill.
In its present form, if it were considered as the final word on this subject, it is one of the most piddling little Measures I have ever read. I say that advisedly. One can only reconcile oneself by regarding it as an interim Measure. It will necessarily be interim, for a perfectly obvious reason. We all agree with the objects of the Bill; in fact, we are more enthusiastic for them than the Government apparently are themselves, but the Bill will fail because its powers are not strong enough to attain the objectives which the Government have in mind. That is particularly true of Clauses 5 and 8.
We have done all we could to give the President of the Board of Trade more power. We have said to the Government, "You should have more power to do this effectively." We are not saying, "Heavens above. What are you up to? You beastly Tories are at it again. We must attack you and you must not have this power". We say, "For heaven's sake take these extra powers, or something will happen."
What will happen is this. The evasions of the provisions of this Bill, which are so clearly possible in the state of trade as we find it internationally, can easily be made, and they have been pointed out on all sides of the House. Indeed, only the Front Bench opposite seems to be of a different opinion. When the Government seek to deal with persons who are guilty of these evasions—and, heaven alone knows that they will want to deal with them, because, like ourselves they resent as much as we do unfair trading practices, and I have said before that we have suffered very badly from them in Lancashire, and that point has been made time and time again in the debate—if the Government then seek to deal with the matter, they will find they have no reserve powers at all. The powers which we wished to give them are not in the Bill.
If we look at Clauses 5 and 8, we find that there is almost a repellent degree of toothlessness about that part of the Bill, and that has been pointed out from both sides of the House. Will not the Government, even at this stage, try to avoid this Bill being an interim Measure, with a subsequent Measure forced upon them by the process of events and unfair trading practices which the very helplessness of this Bill itself provokes? Will they not, even now, take into consideration the fact that they need extra powers if they are to do this job and that we would with all our hearts give them those powers? We cannot understand why they should be so reluctant to accept them.
The only argument which has been put—and it has been put again today by the Minister of State—is that there might be retaliatory measures. There might be retaliatory measures following this Bill. It is conceivable that there will be a sort of combat in toothlessness between different countries, and the Minister is not going to have a lack of retaliation or an avoidance of unfair trading practices merely by putting a footling Bill of this sort forward.
To the best of our ability, we have tried to put the Bill into such a form that it will do something, but I must say that if it is the final step, then, with a rather heavy heart, I can only invite the Minister to say De minimis. Let him not boast about the Bill. It is small, it


is ineffective, and it is likely to fail completely unless it is buttressed by a subsequent Measure. Having said that, I do not see how we can get a subsequent Measure without this preparatory one, and as I can only regard it as an interim Measure, which might lead to something better in the near future, I shall, though without any great enthusiasm, support it.

9.48 p.m.

Mr. John Cronin: I will not make any comments on the Bill itself, but I should like to express, on behalf of this side of the House, our appreciation of the courteous way in which the President of the Board of Trade and the Minister of State have handled this Bill, which certainly augurs well for the future.
I should like particularly to express my gratitude for the change of mind in the modification in Clause 1 which fitted in with an Amendment which I moved in Committee, and which was the brainchild of my right hon. Friend the Member for Smethwick (Mr. Gordon Walker) and my hon. Friend the Member for Wigan (Mr. R. Williams). The President of the Board of Trade did change his mind, and as we are accustomed to changes of mind on the other side of the House, I am sure that the Minister of State will find that his mind will become increasingly agile as he rises to high position. These gymnastics, however, usually take place before or after elections, but in this case the change of mind has been a very beneficent one.
This Bill is overdue, and so far as it concerns commercially advanced countries which have not got anti-dumping legislation, it is particularly desirable, in view of the possibilities of the cold war taking a commercial form. There is a very real danger of that when coping with totalitarian countries which can dump goods without any protest at all from their own side. It is also desirable that before we enter the European Free Trade Area we should define our position on dumping.
I cannot agree with the hon. Member for Bolton, West (Mr. Holt) in his strictures on this Bill. I think there is a possibility that it might be used as a measure of protection. I hope the Minister will see that the Bill is administered with great care, particularly as to

the evidence of dumping. It is very easy for an industrialist who has some difficulty in selling his wares to feel that something which is being imported more cheaply is dumping. But there is a danger that he might be a little lax in suggesting that dumping is taking place.
In Clause 1 there is a reference to
less than the fair market price of the goods in that country
as the criterion of the price involving dumping. I think that would be a rather difficult Clause to evaluate because, obviously, prices vary from time to time and even from place to place. In Clause 8, as my right hon. Friend the Member for Smethwick pointed out, there will probably be considerable lack of flexibility on account of the unfortunate 25 per cent. criterion, but that is something that we can do little about now.
In Clause 3 (4), one notices that an application for relief cannot be made after six months have expired from the time the duty has been paid. I feel that there is a possibility of some genuine hardship occurring there and I hope that in another place further consideration will be given to that question.
The main weakness of the Bill will obviously be the price factor. This Bill will be effective, or fairly effective, when dumping is of prolonged duration, but, as many hon. Members realise, dumping of long duration is not the most dangerous or most annoying kind of dumping. The worst kind is sporadic dumping. That is the kind of dumping which has the maximum deleterious influence on our trade and industry.
Quite obviously, time has to be allowed for someone to find the necessary information about prices and costs of production in a foreign country and report to the Board of Trade. Then the rather complex processes of the Board of Trade have to take place before action can be taken. For short and sporadic dumping this Bill will obviously be ineffective by reason of the time factor involved.
I will not proceed further, as the Minister of State will want to say a few words in winding up the debate. On this side of the House we feel that the Bill could have been greatly improved and it is unfortunate that more of our suggestions were not accepted. We rather relied on canine metaphors in discussing this Bill.


Everyone referred to the fact that it is the dog that bites dumpers and subsidisers. I can only suggest that we give the President of the Board of Trade's dog a friendly pat, despatch it to another place, and hope for the best.

9.50 p.m.

Mr. Walker-Smith: Perhaps with the leave of the House, out of courtesy to right hon. and hon. Members who have spoken in this debate, I might make brief reference to the points they have made.
The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) asked for an assurance that the proviso to Clause 1, which he said he found difficult, enables us to act on behalf of Commonwealth countries. I can certainly, confidently and gladly give him that assurance. The proviso says
… that, where the Board of Trade are not satisfied that the effect of the dumping or of the giving of the subsidy is such as to cause or threaten material injury to an established industry in the United Kingdom or is such as to retard materially the establishment of art industry in the United Kingdom, the Board shall not exercise that power if it appears to them that to do so would conflict with …
G.A.T.T. obligations.
That, in effect, means, if I may paraphrase it, that where there is no injury to a United Kingdom industry we must act in accordance with our G.A.T.T. obligations. The G.A.T.T. allows us to impose a duty on behalf of a third GA.T.T. country, including, of course, a Commonwealth country. Therefore, the draftsman has rightly interpreted what the right hon. Gentleman wished.

Mr. Gordon Walker: Would the word "obligation" mean that? Under G.A.T.T. this is not an obligation but a privilege that we have. I wonder whether the word "obligation" would not, in fact, exclude that part of Article 6 of G.A.T.T., with which, of course, I am very familiar. It seems to me that an obligation is something that is laid upon one, something one must do, whereas Article 6 gives permission.

Mr. Walker-Smith: I think if the right hon. Gentleman traces the negatives through the ingenious draft he will see that the question of not conflicting with an obligation is the same as acting in accordance with a right—I think so.
The other main point made by the right hon. Gentleman was that the Bill was window dressing; but I think that he received a very confident although slightly regretful contradiction of that from the hon. Member for Bolton, West (Mr. Holt). There was another Bill with which I was associated in the last Session which, in its earlier stages, was said by some to be window dressing, but I think that even the right hon. Gentleman will admit that it is turning out to be a very effective instrument now that it is on the Statute Book.
The hon. Member for Ashton-under-Lyne (Mr. Rhodes) referred to my speech on Second Reading about the procedure and complained that then I had said nothing about speedy action in exceptional cases. I did make that omission good in regard to the Amendment moved in the Committee stage by, I think, my hon. Friend the Member for Wokingham (Mr. Remnant); and he accepted my assurance then and referred to it again this evening. I would, though, just remind the hon. Gentleman and the House that in the ordinary way we have to have regard to the interests of the importers as well as of the manufacturers, and the importers representatives have strongly indicated to us their anxiety to have the right to be informed of complaints and to reply to them if they can. In the ordinary case—not these exceptional cases which justify the very speedy procedure—it is obviously right and fair that they should be able to do that.
On the hon. Gentleman's point about Clause 7, I would just remind him, when he referred to difficulties of finding out the cost of production, that if there is not a sale in the country which enables a fair market price to be ascertained then, if the Board thinks fit, it can be done by reference to the cost, or the estimated cost of production. So, in that context, in the last analysis we can estimate, which gets rid of some of the difficulties which he had in mind.
On the subject of the country of origin, which was referred to by the hon. Gentleman and also by the hon. Member for Loughborough (Mr. Cronin)—whom I should like to thank for his very agreeable remarks—we debated that at length, and I do not think that we can usefully add to it now. The hon. Member for Wigan (Mr. R. Williams) was in rather


ferocious mood and deplored any tendency to what he called, rather quaintly I thought, a combat of toothlessness—we have had this succession of dental and canine metaphors during this debate. I must remind him of what I said earlier; that all the time we have to measure what we are doing in this limited context against the possibility of reprisals to us as a great exporting nation. Personally, as a peaceable sort of person, I would rather have a combat of toothlessness than a combat of tooth and claw. Therefore, although hon. Members opposite have, in the classic phrase, confined their enthusiasm within the bounds of decorum, I am indeed glad that they accept the Bill as commended to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.

WHITE FISH AND HERRING INDUSTRIES BILL

Order for Second Reading read and discharged.

Bill withdrawn.

TRANSPORT (RURAL AREAS)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bryan.]

10.1 p.m.

Mr. John Baldock: I am glad to have this opportunity to raise the subject of rural transport once again. If nothing else is achieved, it will at least give my hon. Friend the Member for Guildford (Mr. Nugent), the Joint Parliamentary Secretary, who has served his apprenticeship in the Ministry of Agriculture, which particularly fits him to appreciate the problem we are discussing tonight, the chance to give the House a progressive report on this subject, which we have discussed on several occasions within the last two years.
I believe that several hon. Members wish to speak on this subject, so I will make my remarks as brief as possible. There are two points which I should like to raise, one general and one particular. In general, I must say, quite truthfully, that I believe that rural transport in the

areas which we have discussed is still deteriorating. Branch railway lines are still being closed and bus services are still being withdrawn.
I think hon. Members realise full well that this is a sign of increasing prosperity in the countryside. Those who follow this problem at all know that the principal reason that train and bus services are becoming uneconomic is because so many people have their own cars and method of transport, but, nevertheless, it does mean considerable hardship for those who still have not the means of getting themselves into the local town or wherever they want to go.
I should like to begin by saying that I think that the Ministry's pamphlet, the "Country Bus", was a helpful contribution. It gave a good deal of information which I am sure the great majority of the public still do not understand or appreciate, but I very much doubt whether it has been very widely read. I should like to ask whether it would be so very expensive, or whether it would impose such a tremendously heavy burden on my hon. Friend's Department or on the traffic commissioners, to send an official from the Ministry of Transport to some of the districts which are particularly badly served with transport or perhaps have none at all, or where a branch line is being closed down, or a bus service is being withdrawn.
Would it be very difficult or costly to send an official there who understands the problem and who could approach it from the helpful angle of the pamphlet, the "Country Bus", and investigate what perhaps unusual steps might be taken to meet the difficulty in a particular area?
I believe that such a service, if it could be instituted, would not be at all costly or difficult to fulfil and would be immensely appreciated. It could, no doubt, be done with the co-operation of the parish council or local authority, which could put the official in touch with those who might be able to help to have a bus or another sort of vehicle brought into use.
Many suggestions for overcoming this problem have been made. The Minister has very kindly undertaken to look at the regulations governing the certificate


of fitness for certain types of vehicles. I have not yet heard to what conclusion he has come after the investigation, but I believe that there is scope for easing the regulations in this certificate of fitness so as to make them rather less burdensome on the smaller type of vehicles of, perhaps, eight or twelve seats. New materials, new alloys and lighter metals are now used in vehicle construction, and I think that the old regulations are, perhaps, somewhat unnecessarily rigid. Some vehicles which would be suitable and perfectly safe for carrying passengers into remote districts cannot at the moment qualify for a certificate of fitness. I hope that there will be some easing of the regulations.
Suggestions have been made about combining goods and passengers, a kind of successor to the old carrier with his cart and horse. It has also been suggested that, as on the Continent, we might combine parcel mail with passenger service. That is one service that might well be operated in some areas even if it were not applicable generally. I appreciate that a passenger service would not combine easily with the carrying of letter mail, but I should have thought that something could possibly be done about combining a passenger service with parcel mail.
On the question of branch lines which have been closed, or which are being kept open for goods only, many suggestions have been made in the House about the increased use of diesel rail cars. Several organisations have taken a great deal of interest in the problem and know a lot about it. They have studied the problem abroad and they would be only too pleased to give information to my hon. Friend if he would care to have it. I am glad to hear that some progress has been made with these rail cars. The results obtained from putting them into service appear to be very encouraging. I saw a figure, which I believe to be correct, concerning the Buckingham—Banbury branch line on which a single car diesel unit was put into operation. As a result, the increase in traffic was no less than 434 per cent. That is the kind of figure which justifies the pressure which some of us have been trying to exert in an attempt to have these experiments carried out.
I am still not convinced that we have broken down the resistance of the railways to trying out the really light bus type of vehicle which runs on rubbertyred wheels. These vehicles are operated by one man who drives and collects the tickets. There is no station staff, only a halt. They reduce the cost of a passenger service enormously and they are running quite successfully in Germany, Ireland, and, I believe, in several other countries. I still feel that British Railways have a very closed mind about this ultra-light type of rail car. The ones which British Railways have built are excellent vehicles, solid and heavy, and will no doubt last generations. But I still think that the railways could successfully use this very light type of quite cheap vehicle on some of the lines with the lightest loads.
My second and more particular point applies not so much, perhaps, to small remote villages, although it can affect them as well, as to country towns which have not got their own local bus service. I believe that very few members of the general public, and, possibly, very few taxi and car-hire service owners, know that it is illegal for them to travel or run a taxi or car service on the same route regularly, even if there be only one passenger, unless the owner of the vehicle is the holder of a road service licence.
I completely understand the need for road service licences. I appreciate that there would be chaos in public transport if it was not regulated; there would be many services running on remunerative routes at the busy times, and there would be little or no service provided on other routes at the slack times. Some kind of organisation and control is essential, because, otherwise, a great deal of overlapping would result, and this can be done only by the issue of road service licences to those who wish to operate bus services.
My quarrel is that there is far too much fuss entailed in obtaining a road service licence if someone wishes merely to run a car or station wagon. I had two examples of this in my constituency which brought the nature of the problem very clearly to my notice. In one, several people who worked in the market town and who wanted to go home to their


lunch to a village about a couple of miles away arranged for a regular service. One or two of them were women who had children coming home from school, to whom they had to give lunch; it was essential for them to go back home. For others, it was convenient for them to go home to lunch. But it is illegal, of course, for a taxi or hired car to carry those people every day from their work to their homes without the driver having a road service licence, and the service was accordingly stopped.
The other case presents the problem in the worst possible light. The parents of two children living next to each other, whose children went to the same school on the other side of the town, which involved crossing two main roads with very heavy traffic, felt, principally in the interests of road safety—in connection with which we are conducting a campaign at present—that it was inadvisable for their children to walk or bicycle to school and have to cross those two main roads. It was, moreover, a fair distance. They thought that the best plan was to arrange together for the hire of a taxi to take their children to school every day. This service ran for some time, but it was, of course, illegal as the taxi owner had not a road service licence, and it was brought to an end.
One can readily imagine the feelings of the parents of those children. It seemed to them to be the most absurd variety of "red tape" which made it illegal for them to send their children by that means, avoiding the danger of crossing the main roads. Furthermore, they were, on the face of it, fulfilling a parental obligation at no cost to the State and making no charge on the county council; they were, indeed, carrying out what one might regard as an admirable arrangement.
To be fair, it is true to say that, had the owner of the taxi applied for a road service licence to run between those two houses and the school every day, he would undoubtedly have got one. But he would have to wait until the next meeting of the traffic commissioners at the area town, in this case Nottingham, which is a considerable distance away. He would have to go to a public inquiry, sit through all those proceedings, and then, if there were no objections, he would be granted a licence.
It seems to me that, although some such procedure is obviously necessary if it is proposed to run a new bus service, it is really an absurdly cumbrous procedure in order to deal with the running of a taxi to take two children from one side of a town to the other, when there is no public transport available. I ask my hon. Friend to consider whether it is possible to devise some simple means of issuing these licences for cars where there is no public transport.
The traffic commissioners must know, must have maps which show, where the public transport runs If a town has not public internal transport which will take people from one side of the town to the other, and if a taxi driver asks permission to serve regularly a route across the town, surely the licence should be given him, put into the very next post, so that he can help fill the need. It ought to be possible for action of that sort to be taken quickly and simply without all this formality. I should be glad if my hon. Friend would give that matter consideration.
I look forward with interest to hearing what progress has been made with the solution of the difficult problem of transport in rural areas. It is becoming more and more difficult to attract the right sort of labour into agriculture for the very reason that farm workers, who expect to be able to go to market towns to enjoy the same sorts of amenities as people in other industries enjoy, find it difficult, or even impossible, to obtain transport to take them to those towns. If transport in the rural areas continues to deteriorate I am afraid that that will ultimately further affect agricultural production. I know that that is a matter which will evoke a sympathetic response in the heart of my hon. Friend.

10.16 p.m.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West): It is not my intention to intervene at length in this debate, but I would add a word in support of some of the proposals which the hon. Member for Harborough (Mr. Baldock) has put to the Joint Parliamentary Secretary, who really ought to have another look at this road transport question. Undoubtedly, a general deterioration is taking place in the transport services in many of the rural areas.
Branch railway lines have been closed. They have not been closed until there has been full investigation by the transport users' consultative committees of the proposals to close them. The British Transport Commission has had to establish a case for closing them, which has been the loss involved in keeping them open. When branch lines have been closed the Commission has attempted to assist the rural areas by granting subsidies to private bus owners to provide bus services as alternative transport to the branch rail services. On numerous occasions private bus owners, small men, in many instances, have accepted such offers but, shortly after, have taken their buses out of service. We have seen what happened at Weardale, and that has been mentioned in the House before.
One cannot talk about legislation on the Motion for the Adjournment, but I hope the Joint Parliamentary Secretary will tell us tonight what he proposes to do about rural passenger services with a view to meeting the great social need for transport in the rural areas, and especially those affected by the closing of branch lines. We know from past experience that private bus undertakings will not operate unremunerative services. We have from time to time seen large bus undertakings shed the moral obligation upon them and encourage other and smaller bus proprietors to undertake the unremunerative services. They are run for a time and are then withdrawn.
It is a very serious matter and should not be dismissed with a Departmental answer. I hope the Joint Parliamentary Secretary tonight will give us an indication of what action the Ministry will take to provide these needed services. There has been much discussion about the use of diesel cars. They have not been much operated on branch lines, but they have been run on town to town services and have proved a very good investment indeed to the Commission, and attracted a good deal of additional custom.
The hon. Member for Harborough (Mr. Baldock) quoted a case where receipts had gone up 400 per cent. That is the highest figure that I had heard of, but I know of cases where the introduction of these diesel cars has increased the revenue by from 50 per cent. to 150 per cent. which is a very good increase indeed. However, the introduction of diesel

passenger cars on branch lines involves a real problem to the Commission, and one which we must face.
We cannot ask the Commission to carry out this type of work unless we give something to it to reimburse it for the loss, because when passenger traffic is introduced on a line, certain standards of safety have to be observed in the upkeep of the points and the permanent way and so on. The standard of safety rightly laid down by the Ministry is so very high that a great deal of this unseen expenditure goes into the operation of branch line passenger traffic.
I do not think that the solution to the problem lies in taking measures of this kind. It lies rather in the Minister being able to indicate how he will co-ordinate the road services in these areas, perhaps by continuing to give some financial assistance. The large bus undertakings shed their obligations as quickly as they can, and the traffic commissioners can insist only that certain services shall be maintained for a period. It cannot insist that they be maintained indefinitely. However, there is a social obligation involved here and it is up to the Minister tonight to indicate his method of approach.

10.22 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): I congratulate my hon. Friend the Member for Harborough (Mr. Baldock) upon his success in raising this matter on the Adjournment.

Mr. Rupert Speir: Would it not be more in order for my hon. Friend to congratulate the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell), who does not represent a rural area, on having excluded from the debate others who do represent rural areas?

Mr. Nugent: I think that I would best fill the time at my disposal by answering my hon. Friend the Member for Harborough. I assure him that his plea finds a very sympathetic spot in my heart. Although I have not replied to debates on this topic before, I listened to a great many of them when I was at the Ministry of Agriculture, and my very long association with the farming world makes me very familiar with the acute personal difficulties that people in rural areas find themselves in at present.
I should be giving my hon. Friend a false impression if I left him thinking that this is a problem which can be solved easily. It cannot be, and it is a continuing problem. He asked for a record of progress in the past year. We have no precise figures because the officials in the regional traffic commissioners' offices have been completely employed in dealing with the fuel rationing in recent months and it has been impossible to correlate the figures. We think, however, that there may well have been a continuing reduction in services in rural areas, both road and rail. But I would point out that bus services cannot be withdrawn even by the big companies without the agreement of the traffic commissioner. If he thinks that they can bear additional unremunerative services he is very stiff with them. Something like 40 per cent. to 50 per cent. of these rural services are unremunerative, but the commissioner judges each on its merits and requires full costings before he agrees to a withdrawal.

Mr. Speir: Is my hon. Friend talking about bus companies or about rail services?

Mr. Nugent: I assure the House that neither large nor small bus companies are allowed to withdraw services unless the traffic commissioners are satisfied that there is a case for doing so.

Mr. Popplewell: Mr. Popplewell rose—

Mr. Nugent: I am sure the hon. Gentleman will understand that I cannot give way again. In the few minutes that remain I want to reply to the general debate and to the points raised by my hon. Friend.
I want to make that last point clearly and to have it on the record. The traffic commissioners do their utmost to keep the services going, but they have to have regard to the fact that if they place unreasonable burdens on bus companies, large or small, they endanger the whole structure.
I will deal at once with my hon. Friend's complaint about his constituents who made individual arrangements to help themselves out of their transport problems. I will outline the position for the information of my hon. Friend. The 1930 Road Traffic Act, as amended by the 1956 Act, requires that a motor

vehicle carrying passengers shall have a road service licence if it is used by people who pay separate fares—that is, is a shared service as in the case mentioned—and is used for a regular journey, even if there are less than eight passengers. If the vehicle is adapted for more than eight passengers, a certificate of fitness is needed; if for less, no certificate is needed. To get a road service licence, an operator must apply to the traffic commissioners; their application must be published and an opportunity given far objections to be expressed.
My hon. Friend asked why all this is necessary. I would refer to his comments about the general problem of rural transport. As he rightly says, with the ever-increasing number of private vehicles there is inevitably less and less passenger traffic for public transport, both road and rail, especially in rural areas. This problem has inevitably intensified during the last five or ten years.
As I have said, road operators must apply to the traffic commissioners before closing down a service as well as before opening up a new one. In deciding whether to agree to an application to withdraw a service, the traffic commissioners have regard, among other things, to the amount of unremunerative services which the applicant transport undertaker is already carrying. If the applicant is already carrying a good deal, the Traffic Commissioners must take care not to weigh it down to a point where it is handicapped out of business.
In my hon. Friend's area, one of the bus companies, the United Counties Company, already has as much as 60–65 per cent. of its services unremunerative, and it is clear that it is very near the danger line. What is also clear is that any further deterioration in the traffics will inevitably cause those services to be considerably restricted.
If the kind of informal service described by my hon. Friend, though small in itself, were allowed to proceed without check, it would inevitably cream off some of the traffic and so gravely prejudice regular services to the detriment of all in the rural areas. Hence the need for the law as it now is, and the procedure as described. Even if the service is tiny, publication is needed, and that gives an opportunity for objection


by regular undertakers if they feel that they are affected.
It is probable that in such an instance as this there would be no objection by existing undertakings, but if there is an objection the traffic commissioner will always treat the application, as all applications, sympathetically and with understanding. If the application is not granted, there is provision for appeal to the Minister if the applicant is dissatisfied.
I agree that it seems an elaborate procedure, but I ask my hon. Friend to recognise the absolute necessity to protect the existing services from erosion, from a creaming of their traffic, which would make more and more of their services unremunerative and, possibly, finally, put them in danger of destruction altogether.
It is for that reason, in the general interests of his constituents in rural areas, that this procedure is put there. I assure him that it is operated in the most sympathetic and understanding way possible and is certainly not intended as an additional piece of bureaucracy. I regret that in the remaining seconds I am not able

to reply to my hon. Frend's other points, but I will gladly do so in a letter to him as soon as I can.

10.30 p.m.

Mr. Rupert Speir: Will not my hon. Friend consider whether the Post Office could not help in this matter? Is it not a fact that in continental countries post offices are allowed themselves to run buses, which carry mails, and that they also give contracts to local bus operators? Could not action of that kind be taken in this country? I understand that it is done in Scotland. There might be much more co-ordination and amalgamation of services in this country, if only the Post Office and the Ministry of Transport would get together and consider this problem. Can my hon. Friend give an undertaking on that matter?

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes to Eleven o'clock.